Risk management is a process whereby businesses plan for possible disasters which can negatively impact on them. It’s about reviewing the threats to assets, people, facilities, supply chain logistics, reputation, data, and access control, and then honestly evaluating these threats. It’s not possible to be in total control over every threat to a business, but prioritizing disaster likelihoods (both natural and man-made) is a discipline all managers must acquire; the worst scenario for any manager, or leader, is to be surprised by any major incident.
Some items can get a quick-fix. A low insurance premium for a vehicle fleet, derived from a very high initial excess, can lead cash flow difficulties, especially for a small business. The excess portion of a claim for a vehicle loss is to guarantee the insured has a vested interest in preserving the asset. But, a first excess of R100,000, to provide for a low insurance premium, means this must be taken out of the business cash flow to get the vehicle back on the road. It may be wiser to pay a slightly higher premium, for a lower initial excess, than to face disastrous cash-flow problems.
Another area which needs attention is information technology. IT systems play a crucial role in most business nowadays and, as such, need to be protected. Business owners must ask themselves if their systems are sufficiently secured or not, and to take the necessary precautions if they aren’t. Many businesses outsource this function to experts..
Everyone has access to social media and business’ image can be tarnished by a single Tweet or Facebook post. A good reputation is business currency, and is valuable. For this reason business owners must evaluate the possible threats to this reputation. A weak response to a crash involving a truck with corporate branding, for instance, may send the wrong message to the public. Conversely, a rapid, well thought out response, sends a good message. Have you considered this as a business owner?
Any business relies on customers to buy products and services, and it should be the sole function of the business to provide this. However, it is equally important for a business owner to ensure any risks to providing these products or services are managed effectively.