Business risk is the term used to refer to the possibility of inadequate profits or even losses due to uncertainties or unforeseen events. These could include increased competition, change in government policy, obsolescence, among others.
It’s no secret that every type of business comes with its own set of risks. It would be naïve to assume that because you run a small business, you will not be exposed to the same types of risks as compared to much larger companies. The truth is, whether big or small, your business will be exposed to risk. What may differ is the severity.
Let’s take a look at 3 ways to mitigate risk in business.
The risk of business interruption
Your business can be interrupted by various unforeseen events like fire, natural disaster, among others. This will result in massive loss of property, sometimes injuries and death, and loss of incomes for an extended period of time. As a mitigation against such a risk, as a business owner, it’s advisable to have in place a disaster recovery plan. Such a plan will entail data backup, an emergency alert plan for employees, and most importantly some form of business interruption insurance cover. Having such a plan in place will helpyou cover operating costs and loss of income as you engage in rebuilding. Ensure you are fully aware of what the terms of any insurance cover are before signing up.
The risk of property loss
You may lose property in your business for various reasons such as theft, fire, and natural disasters, among others. It’s therefore important to have a mitigation plan in place for such an eventuality. This will start with an audit of your business environment both physical and processes, with the intention of identifying all vulnerabilities so that you can plan ahead. It will also be important to invest in some form of insurance that offers a cover against property loss that results from theft, fire, and natural disasters. Always make it a point to fully understand the terms of any available insurance cover before signing up.
The risk of injury at the workplace
When running a business, you must always be aware that your staff or any other personnel in your business premise will be exposed to potential injuries which will result in certain costs such as medical treatment and even lost productivity. These are not expenses you want to pay from your cash flow because they may become very high. Therefore, to mitigate against them, it’s important to educate employees on issues of workplace safety, and also take up a workers’ compensation insurance cover. Such a cover will help provide benefits like wage replacement and cater for the medical costs of the staff memberinjured while on the job. It will also offer the business protection from any legal complications that may result from the workplace accidents.
Putting these measures in place will keep you protected from major losses that are likely to cause the total collapse of your business.
We invite you to share with us your experiences and success stories in your business adventure.