All small businesses carry risks that can be financially crippling. Creating a sound risk management program helps make your small business more resistant to risk, harm and loss.
Here’s how to go about it.
- Identify hazards – the first step in risk management is to list the hazards in your organisation that could lead to harm or loss. It’s important to note that hazards are not always necessarily physical. For example, they may be based around workplace culture or environment, work tasks, perils and catastrophic events, or even around things like ongoing access to electricity and the internet.
- Risk evaluation – this involves analysing the likelihood of a risk arising and the potential degree of harm or loss it could cause.
- Risk control – includes taking steps to take to eliminate a hazard or reduce the risk of harm occurring. For example, it might mean changing how a task is done, isolating a hazardous area, doing regular data backups and so on. Insurance also forms an important part of this step, providing a layer of financial protection in case of harm or loss. Types of insurance to consider include property, burglary, liability and business interruption cover, and a workers compensation policy if you are an employer.
- Recording and reviewing – recording incidents allows you to review how well your risk strategies are working and what you can do to strengthen your game plan.
In designing your risk management program, you should ask yourself some key questions – such as how your business would cope in the event of a disaster or even loss of the internet for a day. Being aware of the events that could cause interruptions or losses helps you plan ahead for contingencies. It also helps ensure you get the right insurance for your enterprise, and that you don’t pay for cover you don’t need.
So make creating a robust game plan a top priority in your small business!