Identifying and Managing Business Risks

Operating a business is a risky occupation that is faced by many threats—both internal and external. The impact of the hazards that face the business range from destroying the business to causing severe damage. At times, this damage can take a long time to rectify, not counting huge financial implications, both direct and indirect. Nevertheless, with proper identification of the risks that face a certain business, the management or owners can prepare for them to lessen their impact, or to prevent the occurrence of the associated events altogether. To identify the risks in your company and manage them, you may need professional services from a reliable service provider. As such, you can check out grsconsultants.com to connect with one of the best service providers in risk management and other consultancy services.

Risk identification is part of the business strategic planning

For existing and new businesses, the identification of possible threats that may hamper the operations of the business is a crucial part of the business strategic planning. There are many methods that are employed to identify the challenges that may face business, and each method relies on a detailed analysis of business activities.

The main risks that most businesses face are preventable, strategic, and external. Businesses may employ strategies such as acceptance, transfer, reduction, or elimination to deal with these risks.

Main types of risks facing businesses

Physical risks

The most common physical risks are building risks, of which fire and explosion risks are the main ones. These risks to staff and building can be managed by:

• Ensuring all employees know the location of all emergency exits
• Having employees well informed of the precise street address of your premises to direct emergency response teams in case of emergency
• Having in place fire alarms and smoke detectors
• Installing a sprinkler system to give extra protection to the building, equipment, documents, and above all, the people
• Making the staff aware that in the event of an emergency, their safety ranks first on the priorities list

Hazardous material risks

These common risks are due to the spillage or release of some substances into the business premise’s atmosphere. The material that may be spilled or discharged includes toxic fumes or liquids, poisonous waste, and others. Those who handle fire hazards are equipped or trained to handle these risks, but those who are involved in processes with such substances ought to be sufficiently trained and equipped to deal with them as well.

Location risks

Some of the location hazards that may affect business include fires from nearby premises, storm destructions, floods, hurricanes, earthquakes, and other natural disasters. To manage these risks, staff members should be familiar with all routes in the surrounding area that lead in and out of the business premises. Getting insurance coverage is another option to deal with location risks to the business and third parties.

Human risks

These are risks associated with the people in the business, especially employees. They include fraud, theft, and embezzlement, which can be managed by requiring a system of double signing for crucial documents—especially for payments, dispatch of goods, and others. Also, it’s important to enact a thorough screening during the hiring process to uncover new entrants with previous offenses in their former engagements. Risks of delayed performance of crucial tasks due to illnesses or injuries are also possible and can be averted by having several people trained to do such tasks.

Other risks that businesses face include technology risks and strategic risks. Businesses can handle technology risks by having back up power sources, a data storage system, and so on. For strategic risks, the business may diversify its offering, among other measures.