Tuesday, December 5, 2023
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How to Reduce Risks Within Your Business

For a business to prosper, it needs to be able to monitor and manage both internal and external risk. A risk, put simply, is anything that might have a negative effect on the business. Risks are an inevitable part of doing business; indeed, they may be unavoidable. But that doesn’t mean that they shouldn’t be managed. The risks internal to your business are the ones which you’ll be able to most easily anticipate and control for.

But what do these risks look like, and how can we counter them?

Human-factor Risk

The people who make your business run can also generate risk. Where their labour is suddenly withdrawn, your business will become less productive. This can occur for a range of reasons. A strike may cause your workforce to depart all in one go. Illness and dishonesty can drive absenteeism, which has more chronic and insidious effects.

The way to manage these risks is through engagement, and a competent HR team. If your business is a pleasure to work for, then staff turnover will become less of a problem.

Technological Risks

The technology you use can also pose a problem. What if your computer system fails without warning? What if hackers gain access to your data? Is your productivity being impeded by substandard hardware?

Identifying these risks requires a degree of technical competency which you might not have. For this reason, it’s worth bringing in an outside auditor to take a look at your existing systems, identify potential points of failure, and make recommendations.

Physical Risks

If your property burns down and all of your physical assets are destroyed, then you’ll find your ability to operate severely compromised. This is an extreme example of physical risk – but equipment is always breaking down through wear and tear. You can guard against the more catastrophic losses by taking out the right insurance.

Assessing the risk correctly

A risk assessment should comprise five distinct phases. Firstly, the hazards should be identified. Next, the individuals who might be impacted by those hazards, indirectly or directly, should also be identified. The probability of an accident occurring should be determined, and the appropriate control measures recommended. These measures can be put into place on a temporary basis, before being reviewed later on. Tweaks can be made as necessary.Building a resilient business might mean bringing in outside expertise to assess risk and recommend changes.

Risk is an evolving problem, and thus risk assessments should be performed regularly to ensure that the organisation is on top of it.

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