Running a business can be a dangerous occupation with many different types of risk. Some of these potential hazards can destroy a business, while others can cause serious damage that can be costly and time consuming to repair. Despite the risks implicit in doing business, CEOs and/or risk management officers – no matter the size of the business, from small to corporate giant – can prepare for them if they know what they are.
Business owners take risks in the form of capital investments, hiring personnel and investing in new products. While it can be almost impossible to eliminate risk, you can learn the basic ways to manage risk in a business and try to avoid the losses associated with risky ventures. In order to be a successful business owner, you should work on ways to reduce business risk.
According to the website Risk Management Basics, in order to manage risk you must take the steps to determine when risk can occur. This includes monitoring your competition, changes in the marketplace, trends toward customer fraud or deception, and shortcomings in your company’s procedures.
Once you identify and prioritize business risks, techniques to handle it include transferring the risk elsewhere, avoiding the risk, reducing the negative effects or accepting the consequences of the risk.
Here are 9 steps from Chron.com to help you identify business risk:
Analyze the source of potential internal or external triggers that can cause problems.
Analyze problems you perceive are threats to your business.
Determine which events may adversely impact project teams and prevent them from achieving their strategic objectives.
Examine different scenarios that may occur in your business. Identify any events that trigger undesirable occurrences.
Break down possible risk sources to reveal why they may occur to establish the likelihood of each risk happening and the cost or impact if the issue did arise.
List common risks associated with conducting business in your industry.
Create a chart or table to help you identify factors with increase or decrease risk occurrences.
Categorize risks to take appropriate and efficient action.
Create a risk register document, which acts as a permanent record of your concerns.
Read all 9 Steps in more detail here