Risk management is a vital component of any Aussie business, large or small. No business is ever risk-free but you can reduce the likelihood of a risk developing into a serious problem through being diligent and having effective risk management measures in place.
The bottom line is, the more you can avoid problems, the smoother things will be for you and your business and the more profitable your operation is likely to be.
Let’s look at some key ways you can implement risk management solutions for your business.
#1 – Identify Risks and Create a Risk Management Plan
Step one in the risk management process is to do your best to forecast or identify any foreseeable risk your business could potentially face, either now or in the future. This is an ongoing process that will take some time.
As you start compiling your risk list, you can begin to formulate a risk management plan. Your list will become a part of this plan but it should also include prioritising the risks you’ve listed in order of importance, severity and the likelihood that they will occur.
Once you have a risk management plan (which will always be evolving), you can then set about putting measures in place to reduce or eradicate any risks you have identified.
#2 – Place Someone In Charge of Risk Management Processes
One of the most effective ways to implement risk management in your business is to assign the task of risk management to a particular individual. It could be one of the owners, a manager, or you could hire a specialist risk manager to fulfil the role.
When you have someone who is dedicated to the task, all of their focus will be on risk management, rather than juggling risk management responsibilities with other tasks.
If you run a business that is medium to large in size, you might want to consider hiring a professional risk manager full time. A professional will certainly bring a lot of value to the table and be able to focus their full attention on risk management strategies and procedures, along with monitoring your business on a full time basis.
#3 – Seek Input and Feedback From Your Employees
Your workers are your eyes and ears on the ground. They know their particular areas of the operation and their roles better than anybody else. Therefore, it only makes logical sense to include them in the risk management process by regularly seeking and encouraging their feedback.
If you have a full time risk management professional or you’ve assigned the task of risk management to someone in the company, employees can liaise with that individual regarding any concerns they may have or any suggestions they would like to make that would improve things.
Alternatively, meetings could be held periodically to discuss concerns and seek feedback to improve the business overall.
#4 – Install Risk Management Software On Your IT System
One of the very best risk management solutions you could adopt is to purchase, install and operate specialist risk management software, tailor-made to your business. This dedicated software will basically keep an eye on your business and alert you to any potential problem areas. You can then rectify a problem or strengthen a weakness before it becomes a big issue.
Risk management software enables you to monitor your business at all times and analyse how everything is going. Compiling reports is a breeze with risk management software and if you install it on your business IT system, you’ll wonder how you ever lived without it, it’s that valuable.
#5 – Always Factor In Risk Versus Reward
Risk management isn’t about avoiding risks altogether and never taking a risk in your business. However, if you are about to make a decision that has an element of risk attached, you need to weigh up the risk versus reward ratio. The higher the reward, chances are the risks will be higher also.
It can be challenging making risky decisions that could attract great rewards, so it’s vital that you take time to ponder these decisions and also to talk them over with others, such as your accountant.
Risk management isn’t hard. It’s simply a matter of putting some focus on it and maintaining risk management procedures at all times.