There are always various types of risks in businesses. These risks could be a customer or employee theft, uncollected receivables, employee safety, market shrink, new players, and unconventional competitive environment, and legal liability. Data analytics can help an organization to better understand these types of risks and give them the ability to take preventive actions.

Businesses can also use data analytics to minimize the losses after unpredictable events occur. For instance, If a business overestimates demand for a product, and some products remain unsold, later it can use data analytics to estimate the optimal price for a clearance sale. Businesses can even build statistical models for this type of situation so that the model automatically makes recommendations on how to resolve recurrent problems.

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