Here are some of the highlights:
Risk is an inherent part of being in business. It can be managed and its adverse outcomes can be mitigated. The greatest challenge for small business owners is to find the proper balance between peace of mind and profitability.
Take these steps to put an initial risk management plan into place at your company:
First: identify risks
Some risks are common to most or all businesses. Others are very specific to your business and only you as the owner can know them. The best way to approach this is to use a standard risks checklist as a start and then add to it based on your specific expertise. The Small Business Administration provides a Small Business Insurance and Risk Management guide which addresses potential risks.
Second: determine your company’s vulnerability for each riskVulnerability is a function of probability – what are the odds that a particular risk will materialize- and cost – how much does your company stand to lose as a result.
Third: prepare contingency plans
Contingency planning goes beyond just buying insurance. There are many ways to manage risks.
An effective risk management plan is comprehensive and creative. It goes beyond insurance.
Fourth: Acquire the right types of insuranceInsurance, however, should not be forgotten or minimized! It is a central part of risk management.
Fifth: Monitor and adapt as needed
Risk management plans should be reviewed and updated regularly.
Reckless leaders take reckless risks; prudent leaders take calculated risks. Risk management is the “calculator.”