When it comes to running a business, there are unprecedented levels of risk that could impact the company’s profits or lead it to fail.
While some business risks are minor and relatively easy to overcome, others are more disastrous and can be costly and time-consuming to repair.
Business risks can be divided into two categories, external risks and internal risks. External risks are out of your control and can include things like a global pandemic, politics, weather, exchange rates and interest rates.
On the other hand, you do have control over internal risk. Internal risks may include but are not limited to privacy or data breaches, copyright infringements, lack of capital, poor financial planning, noncompliance and not having insurance or the right legal documents in place.
With so many potential hazards that can crumble a business, many business owners and large companies practice risk management.
Accountants, legal experts, such as Adelaide barristers, and other professionals often work with business managers and companies to identify potential risks, gauge consequences, and define effective responses to the potential risks.
As a business owner or manager, there are things you can do to reduce business risks and help manage the risks associated with running a business.
Below are some of the ways to reduce business risk.
Have Insurance
When it comes to various external risk factors, one of the best ways to protect your business is by taking out comprehensive insurance. When you take out insurance, you will pay an insurance premium and in return your business will have financial cover for when an unfortunate event occurs.
As a business owner or manager, it is your responsibility to determine potential risk and select the right insurance and coverage. Some events and business risks you may wish to insure against include.
- Pandemics
- Natural disasters and weather
- Property damage and theft
- Equipment breakdown
- Vehicles
- Advertising liability
- Injury coverage
- Liability claims
Protect Your Assests
Another way to reduce business risk and protect your company, products, intellectual property and brand is by registering with the appropriate bodies.
Protecting company assets with trade marks and intellectual property rights prevents companies’ assets from being misappropriated, stolen or misused.
There are many forms of intellectual property including designs, patents, trade marks, trade secrets, and copyrights.
Having the necessary registrations and trade marks in place will help prevent other businesses or individuals from trying to make a name for themselves off of your brand.
Consider Pre-Employment Medicals
When debating the perfect candidate for a role, it can be useful to look past the employment history, qualifications and references.
A key focus of a pre-employment medical is to ensure the potential candidate or candidates will be able to manage the physical demands of their jobs. Pre-employment medicals may provide early detection of health and safety concerns, which allows employers and insurance companies to implement preventative measures before it’s too late, saving time and money.
It is estimated that 20 percent of new businesses will fail within their first year, and 60 percent will fail within their first three years.
One way that may help your business from succumbing to the same fate is by evaluating risks and having a risk management plan.