How To Assess and Eliminate Risks To Protect Your Business
Regardless of the size of your business, you are prone to some risk. While there are minor risks that are easy to deal with, there are also those that can eat up millions of dollars if not properly maintained.
In running a business, you need to factor in risk assessment and management. There are four things you can do with risks; accept, transfer, reduce and eliminate risks. While there are external risks out of your reach, it’s within your means to control internal risks.
Through this piece, we’ll discuss how you can protect your business through risk assessment and mitigation. Before then, let’s identify the potential risks your business are liable of;
Strategic risk; an entrance of a strong competitor
Compliance risk; e.g., new regulations
Operational risk; breakdown or theft of machinery and equipment
Financial risk; non-payment by a customer
Environmental risk; e.g., natural disaster
That said, here’s what you need to do to put these risks under control;
1. Prioritize Risks and Threats
As your business expands, and you enjoy growth, there’s also corresponding risk and threats. To stay on top of events, you need to have a risk management plan that prioritizes risks and threats using the universal scale of occurrence.
You can rank the risk based on the chance of occurrence; Very likely to occur, Some chance of occurrence, Small Chance of Occurrence, and Very little chance of occurrence. Put in place a plan to arrest the occurrence of these events that could lead to substantial financial damage.
2. Invest Into Insurance
Seek the help of an insurance advisor to assess the possible risk of your business. This is to evaluate liabilities, legal regulations, and the peculiarity of your industry to ascertain the insurance needed for your business.
With insurance, you can shift the risk to insurers for a small amount compared to the value of the uncovered risk. The risk basic business insurance to consider include life insurance, professional insurance, and liability insurance
3. Choose The Right Insurance
It’s not enough to have an insurance advisor assessing your risks but following their recommendation is the key to a successful plan. Your insurance advisor should be a trusted & professional advisor similar to your relationship with your CPA Accountant and attorney for your business. They are licensed professionals with your businesses’ best interest at the forefront. Once you have a solid relationship with your insurance advisor, following their recommendations is easier.
There are insurance products that cater to all forms of liabilities that might arise in business.
Business risks is abound with destructive consequences. Insurance is a safety net that guarantees the continuity of your business in the face of threats.
Please don’t fail to ask for advice when you think you need it. There are expert insurance advisors ready to help you and your business from going under.