Risk Management

Staying on top of your business

By Elizabeth Ducie

Whatever your business, risks have to be identified, assessed and managed. Just a few areas you’ll have to look at include:

  • Risks of under-resourcing. If you work on your own and you get sick, or you have too many orders to process, you could lose customers through being unable to work. These are risks of under-resourcing.
  • Health and safety risks. There is the risk you or an employee might experience a workplace injury, an injury on a customer's property or a customer might be injured on your property. These are health and safety risks and could give you liability issues.
  • Credit risks. There is the risk that your customer might default on payment or that you yourself will meet with financial difficulty. This is a credit risk.

In dealing with these issues and many others, you need a risk management process within your businesses for two reasons:

  • To think about potential risks in advance and put contingency plans in place, allowing you to get on with business without worrying about things going wrong.
  • A risk management strategy is often a regulatory requirement, especially health and safety risk assessment. Government or local officials may wish to see evidence of our risk assessment process.

Enterprise Risk Management

With so many different types of risks to consider, it is not necessary to address each one in a different way. A generic risk assessment process, flexible enough to fit all circumstances, and a simple risk assessment form covering the four stages of the process may be all that is necessary.

Stage 1: Checking for Hazards

A hazard is a reality - something already existing. Cables stretched across the office floor, a dangerous chemical used as part of the job or a customer who is having financial difficulties are just a few examples.

Stage 2: Identifying Risks Associated with Those Hazards

The risks are the things that might happen. Someone might fall over the cables, chemicals might splash in someone's eye or the customer might go bust before paying our bill. These are possibilities, not certainties.

Stage 3: Assessing Probability and Severity

Probability deals with how likely something is to happen. If the cable is at the front of the office and people are continually walking through the area, the probability of someone falling over it is greater than if it is in a back office where people rarely go.

Severity deals with how bad the consequences of a risk are, and the likelihood of them becoming a reality. If the chemical splashes in someone's eyes, it could blind them or at least stop them working for a time. That is a serious consequence, and could easily be a reality without proper risk management.

Stage 4: Avoiding, Eliminating or Mitigating Risks

Once you know the size of the potential problems, you can decide what to do about them. You might decide that the cable should be rerouted or a sign be put up to warn people of the risk (avoidance). You could ensure that anyone working with the chemical wears eye protection (elimination). Or you might take out insurance against defaulting customers (mitigation).

Risk management doesn't have to be daunting. All it takes is a bit of thought, a generic step-wise process and a simple risk assessment form. Get started on your risk management plan today to protect your business, your employees and yourself.