By Sally Wu
To reduce the likelihood of business risk occurring, businesses need to ensure they have a structured and systematic approach to risk management.
The Covid-19 pandemic has taught us that a defined and planned strategy to sustain your business during uncertain times is the way to go, at least for the next 2-3 years.
New strains of the virus emerge which make governments lock down cities and businesses at a whimper.
Here are top tips on how to improve your business’s risk management strategy:
Prepare your business for worst case scenarios by mapping out likely and unlikely scenarios. Monitor, assess and record risks, both internal and external.
Take advantage of external expertise whenever it is appropriate. Understand what is significant, what is likely, what is possible, and what is unlikely
Plan for the unexpected and plan for an uncertain future. Identify potential measures and procedures to be put in place
Take steps to reduce business risk through mitigation strategies.
Risk management requires a risk management function that requires active participation by all stakeholders to effectively reduce business risk. The earlier you identify the risks and take steps to mitigate these risks, the easier it will be to establish a robust and well-designed risk management strategy.
Insist on defined roles and a clear strategy. Some questions to ask yourself here are:
- Have you adequately documented all duties across the business?
- Stay up to date. Do you consistently review the internal/external risks that the business is facing?
- Have you established internal risk mechanisms? For example, do you have audit staff that look into financial results?
- Do you have a head of internal audit? Do you have risk management functions within the operations?
- Have you established a response plan for event risk such as lockdown, pandemic, war, fire, flood or weather related issues?
- Have you established appropriate areas of risks and their assessment?
- Consider the impact of climate change on your business. How will this affect your supply chain or increased incidents of flooding or snow storms?
Make sure your business insurance cover is up to date. Be wary of businesses that are not adequately insured against the external risks that your business faces.
Clearly document protocols for failing to meet the target. This provides important context and management information.
Ensure you are staffed up to deal with a worst case scenario.
Consider the impact of a cyber incident on the business. Identify how much damage could be caused if a data breach were to take place.
Develop your response plan and test it regularly to ensure that it is effective.
Test your continuity plan. This should be in place in the event that business continuity procedures are disrupted by the external risk.
(The author is a content writer at Startupanz.com)