Small and medium-sized businesses are vulnerable to risk. This is because it’s difficult (from both an expense and resource perspective) to recover from a risk incident.
External risks can come from a range of places: financial markets, technology providers, legal liabilities, accidents, natural disasters and more. Whichever risks are relevant to your industry, it’s vital to protect your assets, finances, intellectual property, data security and employees from potential crises.
This means that, like most things in life, prevention is a better solution than waiting until things go wrong.
What is your business’s risk management strategy?
If your major risk management strategy is to just hope for the best, it’s time to take action. And if you’ve done some risk management work, it may be time to evaluate it to ensure your business is covered sufficiently now and into the future.
When it comes to risk management, the main goal is to make sure that, no matter what happens, your business can continue going about its main role and working towards its goals.
The first step is to evaluate which risks your business needs to be protected from and the potential impact they may have. Some common risk management strategies include:
- IT risk assessment: You may have the resources to create a committee to take on this role, you might prefer to utilize a risk management platform or you may choose to call in external experts. Either way, it’s important to consider your technology’s security, staffing, risk policies and procedures. A good risk assessment of your IT risks isn’t designed to promote fear, but to focus on initiating actions that create positive change.
- ‘What if’ scenarios: It’s time to brainstorm any possible events that could impact you. For example, what if the power went down? What if your major supplier went out of business? What if there was a natural disaster in your area? What if your documents were stolen or destroyed? Assess the likelihood and impact of each event – this will help you to determine priorities for your risk management efforts.
- Insurance: One of the best ways to protect your business is through insurance. From building and contents, public liability, workers’ compensation, machinery breakdown, key person and more, an appropriate level of insurance can cover your risks and set your mind at ease.
- Legal compliance: There is great risk involved with a lack of legal and regulatory compliance, making this a vital area to review.
Every business has its risks. It’s important to know and understand them and, most importantly, take action to protect against them.