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Business Risk Management Guide
As a business owner, project manager or team manager, you’re responsible for managing business risk on a daily basis. Without doing this, your business is vulnerable to high costs or even closure. So, it’s important to get risk management right.
We’ve created this general guide for small businesses, to help you protect your business from potential risks.
What is risk management?
Risk management is about identifying, assessing and preventing potentially damaging issues within your business.
When creating a sturdy risk management process, you need to identify risks that would bring failure to your company, systems or processes.
What are the five steps in risk management process?
Before you start, it’s helpful to get all of the below into a Business Risk Register. This way, you have everything recorded and it’s easier to manage.
Step 1 - Identify the risk:
Work with your team to recognise and describe potential financial risks that could have a negative impact on your business. Here are five key risks to consider:
- Theft or loss of equipment or stock - although you can lock up your business premises, this can’t always prevent thieves. So it’s vital to have the right insurance in place.
- Loss of income - if a disaster happened and your business was forced to close, you’d need insurance to help you financially.
- Changes in infrastructure - if your business relies on its location for its success, any serious change could have a negative impact. An example could be train station construction.
- Operational risk - internal risks, such as the breakdown of equipment.
- Reputational risk - this is about the impression of your customers. If your reputation is damaged, your business success could be seriously impacted.
Step 2 - Assess the risk:
Once you’ve identified the potential risks around your business, you’ll need to assess the likelihood and consequence of the risk. You can do this by creating a list and scoring the potential impact on your business.
Step 3 - Evaluate the risk:
This is where you make decisions on which risks need to be treated with protection, like insurance.
Step 4 - Treat the risk:
This is about planning and executing your responses to the potential risks. It’s best to prioritise based on the risks you identified as most damaging to your company.
When making your response plan, think about how you can reduce the potential for these risks and protect your business. It’s also a good idea to create a contingency plan - what will your company do if this risk happened?
If you’re not sure about the types of insurance your business needs, we can help. Request a quote and we’ll talk through the policies required to keep your business fully protected.
Step 5 - Review the risk:
To ensure all your risk prevention tactics, processes and services are up to date, you’ll need to monitor your Business Risk Register. This way you avoid any nasty surprises and protect your business from huge financial claims.