There is more to risk management than identifying possible sources of accidents and injuries. It is also important to identify risks that could lead to inefficiencies, disrupt your operations, increase your overheads, and affect your cashflow.
In this post we will explore how to identify risks in your business, and establish the process for managing, mitigating, or eliminating these risks.
Common Risks for Every Business
When assessing the sources of risk in your business, you should consider:
- Property Risks – Including damage from fire, flood, subsidence, and other incidents, along with losses from theft, vandalism, and other crimes.
- Finance Risks – Including cash flow fluctuations, debt management, and economic uncertainty.
- Operations Risks – Including bottlenecks and inefficiencies that could lead to risks, possible hazards posed by outdated or faulty tech, and poor quality control measures.
- Cyber Risks – Including financial and reputational damages from cybercrime, and liability costs from data leaks and data loss.
- Legal Risks – Such as claims involving intellectual property theft, dishonesty, negligence, and fraud.
- Supply Chain Risks – Including dependencies, issues with transportation, and potential disruption.
- Stock Risks – Such as losses from theft or spoilage. You will have to consider additional risks if you routinely store or work with hazardous materials.
- Staff Risks – Including issues with compliance, training, skill gaps, and turnover.
How Create Your Risk Management Process
For every risk that you identify for your business, you should also identify the following:
- Who is at risk? Who might be affected by a particular risk, and how might it affect them? Consider whether each risk will affect staff, customers, contractors, delivery drivers, visitors, or a combination of the above. Also bear in mind that some people may experience risks differently. Someone with vision or hearing problems, for example, may find it harder to follow evacuation procedures.
- How likely is the risk? Plus, how severe would the outcome be? This could range from financial or reputational damages to serious injuries and death. After you have quantified your risks in this way, you can prioritise them based on their probability and severity. This will allow you to allocate your risk management resources effectively.
- How are you going to manage, mitigate, or eliminate the risk? The specific steps you take will of course depend on the risk in question. Though for every action you identify, you should also establish who is responsible for carrying it out, along with a timeframe for completing it, and a process for reviewing the risk assessment.
Managing Your Business Risks
Read our essential guide to risk management for businesses. We also have a number of specialist guides for certain kinds of businesses. Some of these offer general risk management advice, but others focus on specific risks, such as fire, theft, or cybercrime.
General Risk Management Guides
- Office health and safety checklist
- Warehouse health and safety checklist
- Warehouse racking safety
- Gym risk assessment guide
- Hotel risk assessment guide
- Museum safety and security risks
Cyber Risk Management Guides
- Cyber security for SMEs
- A guide to social engineering in cyber security
- Cyber risks for retail
- Marine cyber risks
- Cyber risks for hotels
- Cyber security for travel agents and tour operators
Fire Risk Management Guides
- Office fire risk assessments
- Warehouse fire safety risks
- A guide to common fire hazards in businesses and workplaces
- Fire safety in retail
- Hotel fire risk assessments
Get Tailored Insurance For Your Business
James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of insurance providers.
We can help you understand the risks your business is facing, and we can advise you on how to effectively manage these risks. We can then help you access the business insurance you need, and we can show you how to evidence your risk management processes in order to make savings on the cost of cover.