Small business risk management
The Business Centre
“Risk is like fire, controlled it will help you; if uncontrolled it will rise
up and destroy you”. Theodore Roosevelt
Risk is inherent in our everyday lives and we are continuously managing risk. As a business owner risk management is essential to protect the capital and time invested in your business. The goal is not to eliminate risk completely but to manage the risks to maximise opportunities and minimise negative outcomes. Risk Management requires forward thinking and a proactive approach to business management as well as achieving a balance between the costs of managing risks and the anticipated benefits. Business Risks generally fall within one of the following categories:
· Strategic Risks which may be associated with operating in a particular industry
· Compliance Risks which involve the need to comply with laws and regulations
· Financial Risks which have to do with your business structure and the financial systems you have in place
· Operational risks associated with your operations and systems
· Market and Environmental risks which are external that you have little control over such as storms or natural disasters or changes in Government policy.
Some risks can be insured against with policies such as General Business Insurance including Product and Public Liability, Business Interruption, Fire and Theft plus depending on the nature of the business other more specific policies are available such as Professional Indemnity and Key Man Insurance. I recommend that every business start-up seek advice from their Insurer or Insurance Broker to ensure all relevant insurances are taken out to minimise the impact of certain risks.
Risks need to be identified and managed on a continuous basis. Once risks have been identified you will need to conduct a risk analysis to categorise each risk according to its likelihood and consequence on the business. The Risks are then prioritised from highest to lowest and strategies and procedures put in place to minimise occurrence of the risk. Risk Management strategies need to be reviewed on an ongoing basis.
As a business owner your challenge is to infuse risk management into your workplace culture, your everyday business operations and those of your contractors and partners.
Business.gov.au have a good Business Continuity and Disaster Recovery Plan template that you may use or you may like to contact the Business Centre to arrange a time with a Business Advisor to assist you with your Risk Management Plan.