Businesses are exposed to all kinds of risks every day. These risks could affect your income, costs, and even day-to-day operations.
Many entrepreneurs and managers understand the importance of having an insurance policy that covers their properties. However, getting an insurance policy isn’t enough to protect your business.
Developing a risk management plan helps you lower the probability of any undesirable events from happening. And if one does happen, your organisation could swiftly take action as strategies are already in place.
If you don’t have a risk management plan yet, it’s time to consider creating one. Here’s how you can do it.
Identify Risk Factors
By knowing the risks that your business may face, you are limiting any chances that you’ll be caught off guard when one occurs.
There are different types of risks. Some of them are risks from customers, staff, or suppliers. You may also have risks as a result of financial transactions or the use of Information Technology. The location of your business may have inherent risks that you may not be aware of.
Evaluate Risk Factors
Once you’ve identified and categorised the risks, it’s time to evaluate them. Assess which ones are most likely to happen and least likely to occur. Ranking them in this way lets you pinpoint the risks that you should prioritise.
It’s also best to consider evaluating the consequences of each risk factor. Doing so will help you better determine which ones you should focus on. For instance, you may have a risk factor that is most likely to happen but only results in low financial losses. On the other hand, you may have a risk that is unlikely to occur but could lead to a significant financial loss.
The next step after evaluating your risks is to decide which ones you could eliminate and which once you could minimise. If it’s possible to eliminate a risk factor, take action as soon as you can. If not, having a plan to reduce it is ideal.
Prepare a Strategy for When Disaster Strikes
When a risk occurs, make sure you have a blueprint that anyone in the company could understand and follow. Designate a person who would be responsible for overseeing your people and carrying out your risk management plan.
Develop Recovery Contingencies
Once your business is out of the woods, it’s time to start any recovery contingency that you may have. A recovery contingency plan often depends on the type and size of your organisation, and the damage you have to deal with.
Risk management is essential for any business. It helps improve your organisation’s performance and gives you peace of mind.
Make sure you have a sound strategy. Call us at (+613) 9836 2900 or fill out our contact form to schedule a risk assessment.