Managing a business is synonymous with managing risks. Your decision-making on how to mitigate these risks while realising profits and ensuring customer satisfaction will determine how much your business prospers. These are the most common risks you need to plan for:
The changing markets and fluctuation on market rates can have direct and indirect effects on your business. Market rates can affect the price of your raw materials and the labour to make them. This can then influence your price, the buying power of potential customers, and the overall demand for your product. Economic risk encompasses macroeconomic conditions such as exchange rates and government regulations. To counteract these risks, cash is king, and an insurance policy is your safety blanket.
Businesses have to abide by many laws and regulations. The consequences can mean legal penalties, sanctions, and prescribed best practices. Due to the severe implications of not meeting standards in this regard, this is one of the most critical risks you need to plan for. Assess your business and the potential compliance pain points. This will help you draft the right procedures and checks later on.
Some compliance breaches will come from employees who deviate from your own company’s standards. Whether intentional or not, having controls in place to monitor necessary actions by your employees will help you steer the boat in the right direction. Digital communication monitoring systems that oversee work-related messages will protect against compliance risk factors. Make sure you have a team of capable IT professionals or a team from MMR IT to work with you on this.
Security and fraud risk
There are many ways that this risk can manifest. Fraudsters can hurt your resources or your customers. They can hack your systems and sell the data you have about clients. Fraudsters can also steal the identities of your clients and empty their accounts. They can also get a hold of your social media accounts and disrupt your business. Making sure you have algorithms in place to monitor your operations is a worthwhile investment.
The loss that arises because of inadequate or failed procedures, systems, and policies can be mitigated by reviewing the risk of the operations of your business. One way to minimise this is by transitioning all your electronic systems to the public cloud. In case of fire and other fortuitous events, the data you hold is not burnt along with your physical equipment. This is especially helpful when your bread and butter is the customer information.
Reputational risk is about your earnings being curbed by negative stakeholder opinion. Word of mouth can go against your business as much as be in your favour. Make sure you understand customer expectations well and exceed them as much as possible.
Smart and calculated decisions are what thriving businesses are made of. Make sure you assess your risks well and have rules in place to manage them. Use technology to your advantage as much as possible.