Running a business can be extremely rewarding, but it can also come with some risks.
Some are controllable, and some aren’t, but identifying those risks and making a plan for how to address them is an essential process, called risk management.
The sooner you begin, the more prepared you’ll be, so let’s get started!
Step One:
Consider the risks your business could face. These might include weather-related disasters, dependence on technology, the loss of key customers, or even a ding to your business’s reputation.
Step Two:
Now that you’ve identified risks, rank them based on how they could affect the health of your business. Consider their likelihood and the costs to prevent or protect against them.
Step Three:
Next, you’ll want to minimize or eliminate the risks you can control. Identify the steps you can take, who will be responsible for taking them, and then communicate what has been done.
Step Four:
Finally, make sure to document your risk management process, review it regularly, and be on the lookout for emerging risks, such as cybersecurity threats and changing business conditions.
Beyond pinpointing risks, you’ll also need to assess whether you have adequate insurance coverage, should a risk turn into a reality.
Creating a risk management plan won’t completely prevent risks, but it can give you the tools to minimize them and be ready to respond.