Risk is a fact of life for any business. Most businesses are constantly faced with risks such as data breaches, natural disasters, compliance concerns, and impending deadlines.
Today, as companies look for opportunities to expand and grow, risk management is more critical than ever. Clients have high expectations. They expect firms to do what they have promised, and when this doesn’t happen, the relationship is threatened.
As businesses grow more and more complex, balancing customer service with the realities of everyday business can seem like a formidable challenge. Consider a few of the questions that business leaders may be asking themselves:
How can my business maintain compliance as rules and regulations continue to evolve?
With data breaches in the news, how can I be sure that my firm’s customer data is secure?
As with the other expectations of business leaders today, failure is simply not an option. If any of these balls are dropped, there can be devastating effects on client relationships and the firm’s reputation.
While all risks cannot be eliminated, most risks can be managed. Risk management involves identifying and evaluating business risks, with the goal of designing effective strategies to control the outcome. To ensure your firm is able to continue providing first-rate client service, risk management must be proactive and comprehensive, not reactive.
Proactive Risk Management
Tasked with developing and leading a comprehensive, proactive risk-management strategy, business leaders must consider a variety of factors. They must evaluate the seriousness of the risk, the possibility of early detection, and the likelihood of recurrence.
The biggest goal of this strategy is to focus on mitigating risks. This is essential for corporate activities that simply cannot be allowed to fail. Think of Bill Gore’s Waterline Principle: If you’re on a ship, you can patch holes above the waterline, but a hole below the waterline may cause your ship to sink. Don’t be surprised by “below-the-waterline” risks; instead, be prudent and make sure you are prepared for such risks. This means working with vendors to investigate solutions for these potential risks, evaluating and implementing firm policies with these risks in mind, and identifying additional insurance coverage if your firm could be hit below the waterline.
As a business owner, anything can happen anytime. Your business needs to be ready for any risks. This requires you to identify risks arising from your business activities. Look for partners, tools, and strategies that your business can count on. This reduces your business risks and ensures high quality and responsive services.
Are your firm’s current vendors, strategies, and technologies low-price or low-risk? The lowest cost might not be the best selection criteria for leading professional service firms. To, your firm may want to consider lower-risk options.
For example, an importer risks losing his goods in transit, and a manufacturer risks damages in respect of his equipment and machinery. Companies that deal in high volumes of cash risk theft or fraud. These risks are reasonably foreseeable, given the nature of these businesses.
Now that you have identified your business risks, the next step is to determine the probability of these risks occurring and the worst case scenario if those risks manifest. Insurance coverage is extremely valuable for risk management.
Under an insurance contract, the insurance company agrees to either replace a damaged or lost asset, or compensate the business owner for the value of the lost asset. In return, the business owner pays a premium to the insurance company.
Risk control or risk prevention works at reducing the frequency of loss occurring. Under the principle of risk control, you consider and implement preventative options. By investing in better coverage, business leaders can help to protect their firm against liability and help to defray any costs stemming from potential errors.
Applying these principles in your business decision-making process is beneficial in managing uncertainty in the organization, while adding value to your customers.
When everything goes wrong, top firms have developed strategies and implemented tools to ensure their client service always stays first-rate. Faced with internal and external forces, the risk of going without a proactive risk management plan is simply unacceptable. Take this opportunity to ensure that you protect your reputation and your clients from events outside your control.
UBR Corporate Services designs corporate risk management strategies to small and medium scale businesses. Evaluating your options today can provide the protection your firm needs when dealing with unknown events in the future. Click the button below to schedule a consultation.