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Risk management – the process of identifying and safeguarding against potential threats to your company – is a vital aspect of any business’s growth and development strategy. Common risks are predominantly related to finance but may also be connected with the legality of your operations and the people and processes responsible for the running of your business. Given the ever-changing nature of the economy on a domestic and global scale and the varied laws that apply to business practice across different regions and industries, there are many risks for entrepreneurs to be aware of and these threats can crop up in every facet of your business operations. Having the correct approach to finding and tackling these hazards is an essential element of long-term business success.

Countless companies have come unstuck, or in severe cases have had to close their doors, as a result of failing to account for risk in their business plans. This has become increasingly prevalent in recent years as the onset of a global pandemic tested the resilience of businesses large and small, particularly high-street retail storefronts that were already struggling to survive in a market that had for a decade been methodically attrited by consumer shifts to online platforms. Prominent retailers such as Oasis and Warehouse were forced into administration as a result of failing to pivot operations to endure successive lockdowns. These examples are particularly extreme, and perhaps even a little uncharitable, but nonetheless illustrate the sheer importance of risk management to even the most successful corporations.

Risks do not just appear in the form of once-in-a-lifetime public health crises that admittedly are almost impossible to plan for. Business success is also endangered by trends in our increasingly turbulent economy, localized health and safety regulations, legislation change, and even personnel. While you may be excused from failing to foresee spontaneous global pandemics, there is no reason that you cannot safeguard your company against the hazards which typically affect businesses operating in your country and sector. Use this broad-stroke approach to identifying and minimizing the impact of common business risks as a foundation for building a comprehensive risk management plan that will help to preserve the health of your company for many years to come.

Risk Identification

First and foremost, you must endeavor to identify the key risks that are most likely to impact your business in particular. Educate yourself on the successes and failures of your competitors with regard to risk management and consider the economic shifts, laws, and operational practices that have the highest chance of endangering your profitability and reputation. As an example, if you are responsible for food manufacture, then health and safety regulations with regards to hygiene, preparation, and nutrition – and how these may change in the near future – are of primary concern.  Similarly, if your organization handles sensitive data such as customer information in any capacity, your business faces significant risk in relation to the EU’s GDPR law.

While some risks are self-evident, bear in mind that not all threats to business success are obvious. This means that the process of identifying risks is not necessarily as simple as spending an afternoon brainstorming potential problems with your colleagues. Often, expert guidance is required to discern all of the risks that a business may encounter. Larger businesses operating worldwide will find it especially useful to organize a professional consultation in order to identify key risks to ensure the development of a robust and comprehensive risk management strategy.

Risk Management

With your business’ key risks identified, you need to take solid steps toward mitigating those risks. An essential part of all of your risk management efforts is to place accountability at their core – a particularly valuable lesson cribbed from the management of risks concerning health and safety. When dealing with dangers connected to the welfare of your employees and customers, solutions for eliminating risk are not just outlined in an assessment document but are championed by key staff members who are accountable for ensuring that these guidelines are met on a day-to-day basis. For example, many companies have a dedicated Data Protection Officer to ensure that employees and software programs meet the requirements of GDPR law when handling customer information. Using specific individuals to maintain safety standards gives prominence to potential threats and encourages employees to make the management of those threats part and parcel of their role.

This approach of using risk management champions should be applied across the board, from the protection of employee rights to adherence to national and international law. Having people specialize in one risk area means that as a company you address each hazard in more detail and are therefore more likely to cover all potential threats to business success. You can then create a detailed risk management plan which is actually a collection of smaller specific policies covering a variety of niches. For example, one aspect of the plan may involve drafting a new ‘terms and conditions agreement to prevent liability in case of a customer data breach while another could outline how to spread company investments to prevent loss of profits from market movement.

Risk Awareness

Lastly, but certainly not of least importance, is promoting risk awareness within your company. An important part of ensuring that risks are mitigated throughout your business is training your staff and management teams appropriately on all applicable hazards. By giving your employees the tools to effectively manage risk themselves, general business risk is reduced all the more. Whether it involves training on regional legislation or required health and safety procedures, your staff needs to be in the loop with regard to the challenges faced by your company and how these may develop in the future. An effective way of guaranteeing employee risk awareness is to conduct essential training during their induction phase and to provide access to your risk management plan so that they can review key company practices whenever necessary.