Tips for Mitigating Risk in Your Business

When operating a business, there are inherent risks. No one can completely avoid risks, but there are definitely ways that business owners can minimize their risk exposure. 

In general, risks can be put into two different categories: Risks that are external to a business and risks that are internal to that business. 

External risks to your business can include: 

1. Market changes 
2. Rising operating expenses 
3. Weather/natural disasters
4. Changing laws or regulations 

It’s difficult, if not impossible, to avoid many of these risks. However, the better prepared you are for something to happen, the less these factors will be able to impact your business. Some steps you can take to minimize the effects of external factors on your business include having a way to access emergency funds quickly, diversify your business – including the suppliers you use, keep reviewing your pricing strategy and develop solid business continuity plans for when emergencies do happen. For example, your business should have a plan for how to operate if a natural disaster impacts the power for multiple days.

While many external risks are outside of a business owner’s control, internal risks are more easily avoided. 

Examples of internal risks include: 

1. In-house security against theft and fraud 
2. IT and data security 
3. Human errors
4. Condition of equipment

Since you have a bit more control over internal risks, it’s important to stay on top of managing them. Train employees to be able to cover multiple tasks so that if one of them can’t be at work, you don’t miss out on an important project. Also, make sure your employees understand what your business processes and rules are, and make sure that all equipment is clean and in good condition so it will be safe to operate. And keep updated on what the current fraud and security risks are for your business – scammers are constantly innovating to find new ways to steal information. 

It’s important to be aware of the risks that can affect your business, and to act to mitigate them whenever possible. The more you plan in advance, the better you’ll be able to react to emergencies and keep your business safe and running smoothly.