It’s a fact that running a business comes with a certain level of risk. That’s why business risk assessment is so important. Effective risk management strategies save companies time, money, and resources, and can prevent regulatory breaches.
In this article, we’ll cover the primary risk management factors to consider and guide you through the process of compiling a business risk analysis for your organization.
A business risk assessment is a process companies use to identify potential hazards that could interrupt operations and determine the resulting impacts. A comprehensive list of business risks includes anything that could result in:
By identifying potential business risks in advance, companies can analyze various scenarios, take preemptive steps to mitigate impacts, and ensure operations run smoothly.
The reasoning behind conducting a business risk analysis is simple. Some hazards have the potential to destroy a business, while others can cause long-lasting damage. So anticipating the possibilities and being prepared is essential.
There’s often an underlying assumption that risk management strategies are only necessary for large companies and corporations. However, that’s not the case. Arguably, risk management for small businesses is even more critical because they have fewer resources and smaller cash reserves to deal with the aftermath of an unforeseen event or accident.
The primary benefits of assessing risk and developing a risk management plan include:
Designing an assessment process can be challenging, as there are numerous hazards and possible scenarios to consider and account for. That’s why we’ve put together this handy step-by-step guide.
A risk can be defined as any event with a potentially negative effect. When you’re getting started, it may help to compile an extensive list of business risks split into different categories so you can be as comprehensive in your approach as possible. Examples include:
Under each business risk category, identify specific hazards, determine which assets are at risk in each scenario, and assess the scale of impact. Here are some examples to get you thinking:
There are four main types of risk management strategies to help you ‘treat’ each risk:
Creating a company policy guide or employee handbook is a great way to outline your policies clearly. Ensure all employees are given a copy, and get them to sign a document stating they have read and understood the content. Be sure to include details on risk reporting processes so you can constantly evaluate and improve your policies.
Many insurers offer risk management policies that provide financial protection in the case of losses due to injury, assets, and revenue loss. Premiums are available to suit the needs of businesses of various sizes and structures.
Business risk analysis is not a one-time process. Risk assessment should be revisited at least annually and at any time your company’s risk portfolio changes.
At Porte Brown, our primary goal is to help clients improve their efficiencies and identify opportunities for growth and development. Our team of experts is well versed in business risk assessment management strategies and can provide the customized support you need to help your business succeed.
Get in touch today and find out how we can help you meet your objectives.