Every business should have a system of checks and balances that fit their business model. For instance, if someone aside from the business owner can sign checks, then two signatures should be required. While this is just one example, every aspect of a business should be analyzed to determine where there are risks, from business intake through to accounts receivables, payables and beyond. This includes risk with both direct and indirect costs. A simple theft of office supplies has a direct cost. A rogue ‘sales pitch’ to a customer, or ill-represented online banter, can have indirect costs by hurting the company’s reputation. Unfortunately, a business owner may be too close to matters or too busy tending to other issues to really investigate. That’s why it helps to have an outside expert identify potential risks across a business.
Once risks have been identified, a plan must be devised to manage, if not eliminate each risk entirely. Plans may be as simple as creating new policies or procedures along with a roadmap for implementation. This will likely include communications with employees, sign-off from key people, and designations of accountability (for ensuring adherence to policies and reinforcement of penalties for violations). Risk management plans may also require more stringent policing, like security cameras and firewall software.
Whatever the solutions are in the near-term, risk management should be thought of as a continual process. Business owners should look for ongoing ways to get insight to potential risks and how best to manage each one. As the saying goes, “you don’t know what you don’t know”. That’s why it helps to work with those who understand risk and have a proven track record of assessing and managing it. This can be done by working with a group of like-minded business owners in a peer board type setting, or with a firm that specializes in risk management. Either way, it’s important that business owners maintain hands-on involvement in the process and stay apprised of everything happening in his or her organization. This will always be a key success factor in avoiding risks that negatively impact a business.
To learn more about assessing the risk of your business and managing its risks, contact the experts at PeerSpective at 1-850-888-0448.