If you run a business, you understand that risk management can be a huge burden for your company. Simply put, risk management entails identifying, assessing and prioritizing risks. Once threats in a company have been identified, assessed and prioritized, resources are used to control and reduce the likelihood that the identified risk occurs.
Some of the most common risks businesses face include project failures, financial market uncertainty, legal liabilities, natural disasters, cyber-attacks, regulatory and legislative changes, departures of key personnel, and third-party liability. Here are four of the top risk management concerns facing business owners, along with some considerations and warnings.
- A Lack of Cyber Security Protection
Cyber security protection is probably the most critical concern today. To ensure your company is protected from cyber-attacks, consistently back up your data. Be sure your employees are educated on cyber threats and they are aware of the various kinds of cybersecurity situations, including phishing scams and data breaches. Show your employees how to avoid these problems.
Furthermore, require passwords to be periodically changed and do not allow employees to share passwords. Make sure all your systems are updated to reduce the probability of security vulnerabilities. When employees leave your company, be sure to promptly cancel their password logins and all their credentials.
- Poor Internal Communication
One of the main risk management concerns is failing to properly communicate internally. While managers and executives often have overloaded schedules, you cannot let communication suffer. Business must have a culture that prioritizes clearly communicating job assignments, priorities, tasks and projects. Steps you can take to enhance workplace communication include making internal documents accessible through use of shared network spaces; maintaining an “open door” policy; conducting interactive training on email etiquette; using internal newsletters to send out important updates; organizing retreats and other activities outside the office; using video conferencing to engage remote employees; and allowing employees to submit suggestions and concerns anonymously. When communication is poor, it can be detrimental to your projects and employee morale. Fostering a work environment where employees, regardless of title, are encouraged and expected to communicate is one of the most effective ways to mitigate against this risk.
- Improper Risk Decisionmakers
Although most CEOs are responsible for risk-based decisions, they may not always be the best person to make these decisions. It is important for a business to create a structure where critical decisions involving risk are decided upon collaboratively between key stakeholders of the organization and the individuals who will be most affected by the decision.
- Incorrect or Insufficient Documentation
Another common risk management issue is incorrect or insufficient documentation. Many laws and regulations require companies to have proper documentation to support certain personnel, financial, and corporate decisions. Technology has made the documentation process easier, but business should still develop written policies to ensure the completeness of records, including standard operating procedures, checklists and forms. You should also educate your employees on the value of properly documenting their decisions and actions, and develop a system where documents are routinely audited.
Other Considerations and Warnings
- Risk management is not the same process for every company. While one company may emphasize safety precautions, another business may focus on property damage or increased competition. Anyone involved in risk management for your organization should be knowledgeable of the unique needs of your workplace.
- Your risk management plan should include developing a workplace environment that promotes transparency. Have an open dialogue with your employees where they can participate in the risk management process, including identifying risks and possible solutions. A company’s best defense against liability is to have many eyes on the potential risks out there.
- Do not ignore risks associated with interpersonal relationships. If you have spouses working for you or employees who are dating, make sure you develop strict guidelines to prevent disharmony in your workplace.
- A key component of risk management is making sure you understand your obligations regarding employee health and safety. Many business owners lack the time, knowledge or experience to identify safety risks or handle workers' compensation claims. A PEO (Professional Employer Organization) like AlphaStaff can be your partner in achieving your workplace safety goals.
Risk management and compliance is one of the many administrative issues employers face in running a business. AlphaStaff offers a wide range of tailored business solutions to assist companies with addressing known and unknown risks. Please contact us and find out more about how we can help you find more hours in your business day and be more productive.