Risk management planning is an extremely important but sometimes overlooked part of running a successful business. It’s one of those things that gets put to one side to be dealt with when you’re not so busy. But no matter the size or what it does, every business has a range of potential risks that require close attention and the creation of a risk management plan. The type of risks will depend on the industry and exactly what the business does.
To create a risk management plan that’s appropriate to your business, you need to identify the risks, and decide how likely they are to occur. Some will cause major disruption while others will be just a minor irritation, so you need to make an assessment of both the likelihood and potential severity to prioritise your planning. Doing a ‘SWOT’ analysis and understanding your businesses Strengths, Weaknesses, Opportunities and Threats is a good starting place. Any Weaknesses and Threats that are identified are actually risks, and you should work out ways to address them. Try and recognise them before they can escalate then eliminate, or if that’s not possible, minimise those potential problems.
Without wanting to sound too alarmist, there are some common threats all business owners should be aware of such as theft, property damage, injuries and natural disasters like fires, storms and floods. Owners and managers need to be proactive about lowering workplace risk and protecting employees and property. The financial and personal wellbeing of you and your employees could depend on how well prepared you are for risk, and your level of insurance cover such as adequate public liability and professional indemnity insurance. All employees must be covered by workers compensation insurance and you should also check that your workplace health and safety procedures are current. Protecting your business against liability claims and potential lawsuits is critical. Things like public, product and professional liability are all risks that are important to protect against. Business disruption insurance can also be critical for protecting revenue if your business unexpectedly suffers from a disaster like a fire or flood.
Work out who has to do what should an incident occur and your emergency plan needs to be enacted. Communicate the plan to all the people it effects and decide whether the physical communication will be done by phone, email, text or other means. Once these decisions are made, procedural documents can be created and the relevant people informed. The next step is to train staff and make sure everyone practices what has been planned so if an incident does occur then the process can take over. By having a contingency plan in place and through good management these risks can be significantly reduced. Your policies and procedures are controls for risk because they define how things are done. You need to ensure they are working effectively, are streamlined, automated and most importantly, appropriate to your business.
Once you’ve formalised your organisations risk management plan, it becomes a matter of maintaining the momentum and keeping risk management in focus. This plan can help minimise the impact of cash flow issues, damage to your brand and other risks. It will also help create a culture of sensible risk awareness in your business. Without doing this, an incident in your business may not only prove to be a head ache, but could be fatal to employee safety and the businesses ongoing survival.