How to Identify and Manage Risks in Business

Running your own company is risky. In fact, there are numerous sources which indicate that well over 50 percent of all businesses end up closing their doors within the first year while close to 90 percent do so within the first five.

That’s why, if you are a business owner, it is so important that you do all that you can to identify the risks that could potentially affect your company. Not only that, but once you realize what they are, you should also put together a strategy that will properly manage those risks.

If you’d like a few tips on how to do both, this article will assist you:

How to Identify Risks in Business

When it comes to identifying the potential risks in business, it’s a good idea to take out a day or two to write down a series of things that could harm your company if there is not a strategy put into place. For example, something that all companies need is a business plan. It helps you to set goals for your company and to put the right people in place to implement them. Another thing that all businesses need is insurance. This will protect you in case of a fire, a personal injury accident, or even fraud or theft. Another reason why some companies fail is because they don’t hire the best employees for their business. Not only do you need to have the kind of staff that is qualified to meet all of your demands and expectations, but they also need to be friendly to your customers. They also need to be creative as it relates to coming up with ways to help your business to grow too. Speaking of productivity, also make sure to cross-train your staff. That way, should someone call in sick or you end up having to let someone go, there is already an employee in place to catch some of the slack. And finally, you should also have a financial plan in place. Being that your greatest risk is losing profits, it’s important to identify how many staff members you need, if it would be best to run a virtual office (that can reduce a lot of overhead) and if you’re making more money than you’re actually spending to run your business.

How to Manage Risks in Business

Once you have identified what your potential business risks are, it’s then time to come up with ways to manage them. If you were to speak with someone who works for a company like Chartwell Regulatory Compliance and Risk Management about how to properly manage business risks, one of the things that they would probably recommend is that you write your own risk management plan. Aside from writing down the list of things that could damage your company (which has already been discussed), it’s also a smart move to list some specific steps and procedures for how you would handle each one. For instance, say that your office caught on fire and you had to work outside of it for a few weeks until the area was cleaned up. Do you have a strategy in place for how you and your employees will function in the meantime? Or what if you recently purchased a couple of company cars. Do you have commercial insurance to cover them in case you or one of your employees gets into a car accident? By first creating a plan and then updating it as needed, this is one of the best ways to not only protect yourself from potential business risks. It also provides steps on what to do should they happen. For tips on how to write a risk management plan, visit Bright Hub PM and put “how to write a risk management plan” in the search field.