Managing Risks in Your Business
Managing foreseeable risks is an important part of business. Though you can’t predict everything that may happen in the future, there are still plenty of well-known factors to account for that can have an impact on your workplace, and many ways that you can identify and prepare for these stumbling blocks in the road ahead. There are three different kinds of risks to look out for:
Uncertainties
Uncertainty-based risks are the hardest to plan for, including events such as natural disasters and economic downturns. Insurance or expert advice is your best guard against these effects. Having an emergency plan and enacting educational exercises such as fire drills for your employees can help to ensure that everyone in your business will be better equipped to respond to disaster events if they arise, and minimise complications.
It is also important to take responsibility for your own health and wellbeing outside of work. We cannot always predict health complications before they arise or stop them from occurring, so having contingency plans for the business to continue running while you are out of action can take the pressure off such events.
Hazards
Hazard-based risks come from dangerous materials and actions and are the kinds of challenges that Occupational Health and Safety procedures prioritise and account for. It is likely that you already know most of the hazards your business may face but it is important to check up on these regularly to ensure that you’re up to date and ready to respond to any changes which might occur.
It is also important to involve your employees in this. Needs for micromanagement can be minimized if your employees can identify safety hazards in their own work areas and, if it is ensured that they have been provided with the correct resources needed to do so, they may address issues before anything is damaged.
Involving others in the process and seeking their feedback can also ensure that it’s harder for hazards to get missed. More perspectives may pick up on flaws in the risk assessment method or results with far more accuracy than a single pair of eyes, and allow you to iterate on the process for greater efficiency in the future.
Opportunities
Lastly, opportunity-based risks result from your decisions as a business owner – for example, newly bought equipment may risk failing to make back the costs of the purchase. There may be common business mistakes that you can identify and avoid by observing the practices of your competitors. Avoidance of risk entirely can limit opportunities however, so is sometimes best as a last option. Improving processes or having the right staff on board can often mitigate the risks sufficiently to make them more worthwhile.
Effective risk management can incur rewards across many areas. By being prepared for scenarios in which business goods may be damaged, you may reduce your compliance and insurance costs by demonstrating safe and reliable practices.
You may also improve your relationships with your clients, customers, and your own employees by increasing their levels of confidence with you, and by managing expectations reasonably. This can be done through observing the values set down by Australian Consumer Laws, and by being aware of local social and community issues that could affect your business. Conducting research into local affairs and events which affect your competitors can alert you to what your business might be required to deal with in the future.
When you have identified the risks your business faces that is when you will need to evaluate them according to the costs associated with the risks, the resources you can access to tackle them with, and where they line up to your business goals. It is important that they are aligned so that your risk management habits may improve your success rate rather than impede it. You may find that the cost of dealing with the potential fallout is much lower than the cost of trying to prevent it from happening, that the benefits far outweigh the negatives, or that the chances of the risk coming to pass is negligible, and so decide that it is an acceptable risk.
When you do decide to tackle risks, make sure that you prioritise appropriately. Some risks – such as workplace hazards – may have far more immediate or damaging consequences than deciding on which branding opportunities to follow up on. Being aware of the time span in which decisions need to be made and in which reactions are needed for the most likely risks will allow you to put your energy where it is needed the most.
Ultimately it is your decision as a business owner when to take risks, and if or how you need to manage each one. Awareness and calculated assessments of risks are essential ingredients to making informed decisions so that you can ensure smooth sailing ahead.