About 69% of executives aren’t confident that their current risk management strategies are enough to meet future needs. If you are among that percentage, then you know it’s time to level up.
Business threats can come from various sources and happen at the most unexpected of times. They may include harsh weather conditions, lawsuits, economic strains, and even inflation. You need to have strong risk management techniques to overcome them.
The last thing you want is to encounter another challenge unprepared, especially now when your business is recovering from the effects of the pandemic.
You have come to the right page for risk management advice. This article will highlight seven risk management strategies every business should try.
- Prioritize Risk
The first step to prevent potential threats is knowing how they would affect your business if they were to happen. You need to rank risks and threats based on the probability of happening.
It’s advisable to partition risks into four categories. You can rank them in this order – most likely to occur, likely to occur, not likely to occur, and least likely to occur. By doing so, you’ll know what risk to pay more attention to.
The best way to go about this is to brainstorm with your team on how to prevent them from happening. Besides, if some of the risks are out of your control, you can plan on how you’ll handle them.
If the risk is in the ‘least likely to occur’ category but poses a higher financial challenge, then you should pay more attention to it.
- Strong Brand Positioning
Your number one asset is your company’s logo, digital presence, and reputation. The main priority of any business person should be to satisfy customer needs at all costs.
It’s advisable to put in place a program that ascertains the quality of your products. For instance, you can test and analyze your products before you release them to the market.
When your customers get used to a certain level of quality, it’s hard for them to switch brands. This technique will ensure that you keep your consumer base even in the toughest of times.
Your product may even go off the market for a while but your consumers treat it with the same enthusiasm when it gets back.
- Premium Insurance
Before consulting any insurers, you need to access your business liabilities. They’ll help you figure out what type of insurance to get. For instance, in a landscaping industry, the landscaping business has different insurance needs – Commercial General Liability Insurance, Workers’ Compensation Insurance, and. Excess Liability Insurance, among others.
If you have employees working in a factory setup, then it’s best to get premium covers for them too. No one can predict when accidents are going to happen. Having uninsured employees is the easiest way to attract heavy lawsuits.
Before you sign the insurance papers, always go through the terms thoroughly and compare and calculate the relevant life insurance of insurance companies. Some companies only pay the full cost when you have premium insurance.
You’ll pay for insurance at a low cost compared to what the risk would have cost you. This business risk management technique has withstood the test of time.
- Business Registration
Few people give much thought to their choice of entity when starting a business but they should. When starting a business, you hope for the best but things don’t always go as planned.
If your business fails, you might have to cover the extra costs with your assets. It can be quite sad losing your family home over business debts.
To avoid all these, choose a business entity that protects the individual from liability.
Most people tend to go for a partnership or a sole proprietorship because they are cheaper than corporate entities. Moreover, they do it as a way of evading heavy corporation taxes. If you are considering a business registration for foreigners in Singapore, the process is generally straightforward. The most common business structures for foreigners are Sole Proprietorship, Partnership, and Private Limited Company (Pte Ltd).
However, only an entity under a limited liability company can offer you protection. Besides, the cost is much lower than what you would incur in case things go south.
- Put Everything in Writing
It may seem like obvious risk management advice but put everything on paper. Everything that you deem important to your business should be in writing.
Besides, the contract should contain signatories from all parties involved. Go as far as making your employees sign non-disclosure agreements in case of sensitive business secrets.
Consult your lawyers when drafting the agreements to ensure that everything is in place. When facing a business threat is impossible to sue without written proof.
That is why it’s important to handle your UCC filing. Besides, you must conduct your due diligence beforehand. You can learn more about this and the importance of UCC filing.
- Right Business Practices
There are many risk management techniques that you can apply but without the right business practices, they are futile. Smart business owners understand that any practice can either increase or cut risk.
For instance, when it comes to hiring employees, you must be careful in the screening process. You realize that you’ll be entrusting an employee with the company resources. So, it’s only fair you ensure that they’re responsible.
Moreover, heightening security by CCTVs and guards will protect your facility from vandalism. Obeying tax laws among other federal requirements will also save you a lot of trouble with the authorities.
- Have a Risk Assessment Team
When things have been running smoothly for a while, you can neglect to get risk management help. But, having a team that is handling risk is necessary.
Smart business owners outsource teams that are experts in analyzing risks. Moreover, they come up with various strategies that are industry-specific to mitigate risks.
Some people may avoid outsourcing an external team to save up on costs. If you choose to work with an internal team, make sure that at least one is an expert analyst.
Risk Management Strategies
To keep your business thriving, you must be on your toes at all times. Preparing for the worst doesn’t mean that you aren’t hopeful.
The above risk management strategies will protect your business from risk. Ensure to meet customer needs and maintain top quality standards.
Further, always consult professionals when in doubt. You can find more insightful business advice on this website, so check out some of our other articles before you go.