Identifying the hazards that could affect your profits, customers and processes is important to the overall success of your business.
A risk assessment lets you classify and analyze potential pitfalls and rank them as to how they could affect your business. It also helps you decide on how much risk is tolerable.
While they differ for every business, the two primary risk categories are internal and external.
Internal risks include things over which you tend to have more control, such as dealing with misbehavior by managers or employees, departures of key staff members, loss of vital records, and operational issues.
Things you can do to minimize these risks include having clear policies and expectations; cross-training workers in key jobs; ensuring protection and backups of records and data; and making sure you have contingencies for issues like a fire or the loss of a key supplier.
External risks are less controllable and include natural disasters, regulatory changes, and new competitors.
Things you can do to mitigate external risks include buying the right types of insurance to cover potential losses, and to regularly assess compliance and market conditions.
Not all risk is bad, especially if it comes in the form of new products or services that could increase your profits. You’ll just need to plan on potential development costs and possible benefits to weigh whether or not you are willing to take the risk.
It’s important to realize that not assessing the risks your business might face could cost you time, money and customers – and maybe destroy your business.
Don’t take that risk.