Even the most stable businesses can have major risks out there waiting for them. It’s why most responsible businesses rigorously carry out risk management – they want to proactively resolve any issues before they pose a serious problem. Risk management is usually the process of identifying, assessing, and reacting to potential problems that could harm your business. Below, we explore some of the main risks that could impact your business.
Running out of cash
Running out of capital means the end for most businesses unless they can suddenly attract significant investment. As such, businesses should prepare in advance for external shocks, such as the pandemic, that could halt cash flow. A responsible business would have at least 18 months of operating costs set aside to ensure that the possibility of running out of cash is lessened.
Investigations can be a major problem for businesses too. This could be to investigate fraud or any other similar illegal activity. Businesses can try and solve this problem from the roots, by creating an efficient and transparent working environment. But it’s also worth planning ahead to react quickly to investigations. In this situation, having a white-collar defense and investigations team ready and prepared can help the business quickly deal with any problems.
Your business can quickly begin to fail if you don’t have the right team around you. This could be because friction ruins productivity. Or if you make poor hires, you could end up with senior employees making harmful decisions. Instead, you should manage this risk with a meticulous hiring process. Ensure that you thoroughly vet and assess potential candidates for a job and offer competitive salaries to attract top talent. If you create an unsettling working environment, you could also find that your top staff moves elsewhere, leaving you with a talent drain.
Another major risk is to be found in compliance. If your business is failing to meet legal regulations in your country, then you could quickly be handed out fines or worse. As such, a process should be put in place to monitor compliance. This can usually be carried out by an experienced legal professional.
There are plenty of risks facing businesses. But by being aware and putting risk management processes in place, you should be able to give yourself peace of mind.