As a small business owner, you should be prepared to expect the unexpected. Don’t be one of those people who learn about risk management the hard way…it’s important to understand that all businesses (yours included) have risks.
What is Business Risk Management?
There are many things that can impact the health and operations of your business. While you can’t predict the future, one of the best ways for you to manage risk is to evaluate risk factors and make contingency plans on how to deal with the risk if/when it comes up.
Risk management is the process of identifying, prioritizing and reducing or eliminating risks. When you identify risks before they occur, you’ll better react to certain problems and feel confident when it comes to putting a solution in place.
Where Do You Start?
If you want your business to succeed, it’s imperative that you have a risk management plan in place. If you don’t, set aside a day or two sooner (rather than later) to identify risks surrounding the activities of your business. Ask yourself what if…
- A personal or family emergency takes me away from my business for an extended period of time?
- A trusted employee steals from me or my business?
- Someone is hurt by a company vehicle driven by an employee?
- My largest customer decides to no longer do business with me?
- My largest supplier can no longer fill orders?
- I lose my bank line of credit or loan?
- I am part of a lawsuit?
- Your data or company information is compromised?
- A fire, flood or other disaster destroys my business?
- I lose an employee or manager to a competitor?
- I become a victim of fraud?
If any of the situations listed above happen to you, it can wreak havoc on not only your business, but your reputation and credibility. That’s why it’s so important to take the time to define, assess and prioritize risks as they are related to your business. Enlist the help of outside experts to help you in this process. Then, take it one step further by documenting and implementing a risk management policy.
Assess and evaluate your risk management policy at least once a year. As business needs change, so do the possible risks associated with it. Remember…it’s your job to protect you business. If you don’t do it, who will?
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