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Article | 3-minute read

Developing a risk assessment and management plan for your business

Business planning

As a new and growing business, you are often focused on how to make money and keep your business afloat rather than risk management. However, as we have seen in recent times, it is important to consider all possible risks and scenarios that may exist both within your business and your external operating environment.

 

1. Reputational risk

The value of your business lies in your brand. In your risk management policy you might consider incorporating in writing various controls to protect your brand including:

  • who will handle media enquiries
  • carrying out due diligence on potential business partners and online links.

 

2. Financial risk

How are you covering yourself against financial loss and cash flow shortages? Make sure you have:

  • a payment process
  • insurance policies
  • a good relationship with your banker
  • process for reviewing debtors weekly or monthly

 

3. Customer risk

This involves processes for customer complaints and customer response rates. Consider this across all of your communication channels including social media. 

 

4. Supplier risk

Who are your key suppliers? If one of them is an IT provider, do you have service level agreements in place?

 

5. IT risk

If you’re an online business, your key risk is loss of data or a website attack. You also need to consider: 

  • virus protection on your computers
  • data storage
  • backing up of information

 

6. Competitor risk

There is always the risk of competitors eroding your market share. What are you doing to stay informed about your industry and your

competitors?

 

7. Economic conditions

Diversify your product or service offering to offset peaks and troughs in your revenue cycles. You can also maintain adequate cash reserves to cover you for a slow period.

 

8. Key person risk

This is a big risk when you are a small or solo business. Some ways to mitigate risk include:

  • having personal trauma insurance
  • writing procedure documents so someone can fill in quickly
  • having a key contacts list

 

9. Business continuity and disaster recovery

There is always a risk that your office could be damaged by fire. What would you do? Some considerations include insurance coverage and data storage offsite.

These risks are real and worth your time and consideration if you don't have a risk management policy yet.

 

 

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