Business risk management: 12 ways to safeguard your company

26 January 2022

A constant challenge for any small business owner is balancing risk against reward. Some businesses will be  more willing to take the plunge, but often don’t recognise potential pitfalls. Alternatively, those who are overly cautious may not maximise their business potential. The question is, how can business risk management help you achieve a perfect balance.

Having a solid awareness of the financial dangers that could affect your business can n help you decide your direction.
Assistant Head of Risk Underwriting at Allianz Trade, Paul Anderson explains: “Failing to plan for a shock is common among businesses that have previously seen success. Just because you have done okay in the past doesn’t guarantee it will continue to be so in future. For example, the bigger you get, the more you will appear on competitors’ radar, which is a risk in itself.”

irect and Bank Distribution Underwriting Manager, Victoria Keeling adds: “Everything comes back to knowing the market, knowing your obstacles and risks, then trying to prevent them.”

These steps can help you avoid some of the common pitfalls:  

Build a strong workforce

1. Delegate responsibility to others as your business grows. Running an expanding business single-handedly will limit its potential and eventually spread your time too thin.

2. Train staff to deputise if a key person is absent or leaves the business.

3. It is important that recruitment includes background checks, so be sure to upgrade your practices.
 

Check emergency procedures

4. Ask the owner of the building you work in for details of checks on fire, floods and other building-related risks. You don’t want to risk an excess of loss on the information or equipment that you keep in the building.

5. Run workshops or tests to train you and your employees about potential building risks. Appoint officers who are responsible for training and emergency procedures.
 

Protect against fraud and cybercrime

6. Check that your IT systems are protected against the latest threats –  cyber criminals and fraudsters  are increasingly focusing on small businesses.

7. Book your staff onto training courses, so they can recognise fraudulent attempts to obtain sensitive information, such as phishing attacks, and the dangers of using their own devices.
 

Take stock and forecast

8. Audit your customers and check for signs of late payment , such as erratic or partial payments and only settling smaller invoices.

9. Assess your market and keep tabs  on the performance of competitors.

10. Forecast your cash flow   for the next 12 months.

11. Insure yourself against late or non-payments with  trade credit insurance .
 

Make it a yearly habit

12. Effective business risk management needs to be regularly reviewed. Reassess every 12 months as threats, risks and changes on a global scale evolve.

 

Find out more about measures to help with risk management, including  excess of loss (XoL), trade credit insurance and  surety bonds .