“Business risk.” A phrase that may sound alarming, yet it’s part of owning a business. Both internal threats (slip and fall hazards, theft, high employee turnover) and external threats (economic downturn, computer hacking, a pandemic) can threaten to crumble your business’s foundation, but how you prepare, prevent, and reduce the amount and degree of risk is entirely up to you.
How risk affects you and why it is essential to deal with it
Many companies either turn a blind eye or repeatedly overlook common risks to their business. This may be due to a lack of due diligence or bad luck in shifting external factors—a pandemic, for instance.
Risk is a facet of business that owners must be aware of, along with the most common ones such as security and fraud, compliance, operational, financial, economic, or reputational. You don’t have to fall victim to scenarios that lead to losing valuable resources such as time, money, and trust. Being proactive and putting a proper risk reduction plan in place lets your company meet targets, achieve goals, provide returns to investors, and prevent bankruptcy.
Take the reins and reduce your business risk by:
1. Making a plan
Don’t be cruel to yourself by putting the weight of your company solely in your own hands; hire a professional. Risk managers are trained to minimize and mitigate adverse outcomes by building, managing, and developing company risk management plans. Effectively reduce errors by using a business and risk management structure that reduces the chances of falling victim to unintentional risk.
If a professional option is not in the cards, begin your journey by identifying and quantifying your potential risks. Plan your mitigation process dependent on how likely risks may occur, then record and regularly track them so you can identify changes as they happen.
2. Controlling your variables
Every business faces different risks that depend on factors such as industry, market, and location. Identify the main variables contributing to your business risk, such as:
- Employee safety
- Asset protection
Once you have identified these variables, you can take steps to protect your business and control the areas you can change. For example, to improve employee safety, you could conduct quarterly safety assessments, provide safety training, and create a guidebook for maintaining safety standards. To manage cybersecurity threats, you could implement an encrypted password manager and train employees to avoid phishing schemes.
Although risks are unavoidable, you can reduce their frequency by identifying, monitoring, and managing the variables that contribute to them.
3. Asking questions
As a leader, you must actively engage with your employees and build a stable stream of discourse and trust, so you can fully leverage your employee’s institutional knowledge and valuable insight. Learning about their perspectives and how they feel about the business can help you address any potential risks to your organization.
4. Preparing financially
You need enough resources and capital for risk management; it can ensure you have the means to deal with risks as they arise and maintain the stability of your business over the long term. This includes identifying your risk tolerance capacity to understand how much money can be allocated to risk management, and then building proper and sustainable funds to protect your assets in the event of a risk occurring.
Don’t fall victim to preventable risks due to lack of preparation; actively combat and reduce them by engaging in the four practices above. By building a plan, identifying and tracking any contributing variables, asking questions, and building a sustainable structure that can withstand uncertainty, you will reduce the chance of risks impacting your business, giving you and your employees much-needed peace of mind.
Content provided by Q4intelligence
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