What To Plan For When It Comes To Business Risks

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Many business owners are well aware that there are risks involved in running any sort of commercial enterprise. We’re regularly reminded with terms such as ‘risk management’ and ‘compliance management’. Business owners are also told to plan for business risks. This is all well and good, but without really knowing what to plan for or what risks to be aware of, these reminders can be somewhat of a moot point.

While every single business is a little different and can face a variety of potential issues, there is some common ground that’s relatable to most businesses. In this article, we’ll be taking a look at some potential risks to plan for so you can avoid pitfalls in your business. 

The Risk Of a Changing Economy

Economies in every country are constantly changing and evolving due to numerous reasons. Being aware of this and how it can impact on your business profits is something that needs to be kept in mind constantly.

For this reason, it’s vital that every business owner plan for an economic downturn that can reduce sales and profitability. One way to counteract this is to create several income streams and not just rely on one. It’s also very important to keep some money in reserve to see your business through darker times, until the economy improves again.

Cutting back on business expenses and overheads for a while will aid in keeping your cash flow healthy. 

Financial Risks

This differs from the point above as it’s not dependent on the state of the economy, but more to do with your personal business practices. This could involve extending credit to your customer or supplier base, business loans and business credit cards, or really any type of financial risk that could adversely affect your business and it’s profitability.

A solid part of effective risk management is to create a risk management plan, where you map out potential risks and pencil in likely solutions so they don’t present a major issue in the future. A good portion of your risk management plan (and indeed your business plan) should be devoted to financial risks the business may face.

Enterprise risk management solutions need to be in place across the board to ensure your business is effectively recognising and managing risk, including financial ones. 

The Risk Of Non-Compliance

Every business enterprise, no matter what the industry, is required to follow certain guidelines and rules to keep employees and customers safe and also to protect the business from lawsuits, fines and other incidents that could prove costly.

As a business owner, it’s your task to be fully aware of what the laws are that govern your business and to make certain everyone and everything in your operation is compliant with those laws at all times. In fact, all of your staff members need to be aware of what’s required so they can follow the guidelines.

Perhaps write up a report and then issue it to every member of staff so they can study the rules and regulations. 

IT Risks

Many modern businesses rely heavily on IT, the internet and computers. With so much happening online, this can leave businesses vulnerable to cyberattacks. A hacker could steal important information, corrupt your files, steal identities and even bring your entire IT system crashing down.

The result of the above can be catastrophic and may even result in your business being shut down for a time.

When it comes to planning for business risks, IT should be very high on the agenda. 

The Risk To Your Reputation

Word of mouth referrals, positive reviews and testimonials, and generally just putting forth a sense of trust is what many businesses thrive on. This is all about the reputation of your brand. If anything happens to damage that reputation, it could potentially spell disaster for your business.

Several unhappy customers, for example, can cause a lot of damage, as can fulfilling orders with inferior products.

Your reputation needs to be protected at all costs, so focus attention on this aspect of business risk so you always have a happy customer base. 

The Takeaway

So long as you’re aware of the potential risks your business can face and have plans in place to mitigate those risks, there’s no reason why your business can’t be successful for many years to come.