Many of us are worried about what the next 12 months will be like, with increasing costs of living, talk of a recession, and political and civil unrest.
While we can’t do much about these big things, we can be proactive and safeguard our businesses as best as possible to survive turbulent times. Read on for some top ways to reduce risk in your organization over the coming months.
Start by Determining the Key Risks You Need to Be Aware Of and How They Might Affect Your Venture
To mitigate risks, you first need to work out where your organization has the most potential for problems. Think about what could pose a threat today and in months or years, including both preventable internal and external threats. Some risks may be specific to your business or industry, while others will be more general.
For example, you could face IT hacks or failures or health and safety risks like exposure to toxins, slips, falling objects, and car accidents. If you operate overseas, you might find that some of your business functions are negatively affected by economic or political instability or currency transaction problems. Terror attacks and natural disasters are also potential threats anywhere in the world.
You also need to consider what might happen if new players enter the market and provide stiff competition to your venture or if there are industry changes or new laws or regulations that could lead to harmful consequences for you. Plus, keep in mind issues if your clients don’t pay or take too long to settle their bills, you have theft or equipment breakages to deal with or supplier costs skyrocket.
If you spend time making a list of all the ways in which you could face risks for your business, it is much easier to determine how to mitigate them.
Plan and Prepare
Next, it’s a good idea to spend time planning and preparing. Look over your notes on the risks your organization faces and determine which are the most crucial to take proactive steps against right away. Also, keep your business plan in mind and update it to include risk-related details on financial projections, customer analysis, the current marketplace, future possible target demographics and changes, and your sales and marketing strategies.
You should also ensure that your SWOT analysis (looking at business strengths, weaknesses, opportunities, and threats) and product or service expansion plans factor in your identified risks. Your preparation should also include developing an emergency management plan or updating it if you already have one. Use this document so that you and your team have a roadmap to follow if a risk you’ve spotted becomes a reality.
Put detailed notes in your emergency plan about how people should handle issues that arise, in order of execution. Business leaders and workers all need to know what to do if disaster strikes or plans need to change. Set out clear responsibilities for everyone and communicate this to your team.
Complete Tasks to Reduce Risks Proactively
Of course, one of the critical parts of reducing risk is taking proactive steps to try to stop adverse outcomes from happening. You can’t 100 percent avoid every risk every year, but you can limit the chances of things occurring and reduce the consequences for your business if and when they do.
Start by training your workers to keep the work site safer by handling and storing hazardous items correctly, picking up trip hazards, putting heavy items away carefully, and maintaining equipment and operating it safely. You should ensure that workplaces stay clean, that employees have necessary safety equipment to wear or otherwise use, and that locks and other security defenses are in place on-site.
To reduce financial risks, keep a close eye on cash flow, avoid getting into debt unless you feel confident you’ll be able to get out of it with an upcoming bulk order or the like, and submit all your taxes and personnel paperwork on time. Abide by relevant laws and regulations, and learn how to trademark your business name so that other entrepreneurs can’t infringe on your intellectual property and diminish the value of your venture.
In addition, limit the number of high-risk customers you sell to, and don’t give people terms so they can pay after receiving items unless you’ve background-checked them and had some time to see that they can pay for stock upfront. Diversify your firm’s income so you’re not reliant on just one source of cash flow, too.
You also need to check the references of your staff hires and run background checks, and limit the number of people who have access to sensitive business information, such as bank account details or pin codes for security systems.
Furthermore, use security software, quality passwords, and the like to protect your organization from digital attacks, and don’t try to do everything alone. Invest in specialist advice as needed, especially for regulatory and personnel matters. Buy insurance and maintain proper business records to reduce risks, too.
If you follow these steps, you’ll better manage risk and set your venture up for more long-term success.
