Owning a business involves more than just keeping it operational and turning a profit. It also involves keeping it safe from harm, danger and outside risks. Here are some common types of risks to be on the lookout for, as well as what types of businesses that might be impacted by each one.
Physical risks: Anything that can happen to the actual business property. For example, fire, tornado, or explosions. Physical risks can happen to any type of business.
Best Risk Management: adequate property insurance and plan for safe evacuation for all employees.
Human risks: Workplace problems caused by employees. Some examples include alcohol or drug use in the workplace, employee theft, or embezzlement. Human risks can occur in any business.
Best Risk Management: careful screening of potential employees and criminal background checks.
Technology risks: Power outages or computer failure can shut down the entire operation. Technology risks can impact all types of businesses.
Best Risk Management: backup systems and generators ensure the system is always functional.
Financial risks: When the finances are at risk, the entire business is at risk. Financial risks are most common with small businesses that rely on funding, grants, and small business loans to keep afloat.
Best Risk Management: Responsible spending and cautious expansion.
Credit and Investment Risks: When a borrower defaults on his or her loan, the lender risks not getting their original investment, much less the interest. This type of risk is most common with lenders and creditors in the financial industry.
Best Risk Management: thorough credit checks and strict guidelines.
Legal risks: Legal risks can be a problem when government laws and regulations affect the operation of your business. Although legal risks can affect any type of business, they have the biggest impact on small business owners.
Best Risk Management: a good working relationship with local government and a good lawyer.
Market risks: Flucuating markets and problems in portfolios, stock prices, commodity prices and interest rates. This type of risk generally affects the financial industry the most but can actually impact every business to some degree.
Best Risk Management: keep your bottom line low so your business won’t crash at the first sign of trouble.
Operational risks: Physical, fraud, and legal risks cause problems that are severe enough that they can affect the entire operation of the business. Other examples of operational risks are hurricanes, blackouts, fire, legal infringements, rule breaches, policy violations and computer hacking. Operational risks can impact any type of business.
Best Risk Management: stay one step ahead of any potential disasters with regular risk assessment.
It’s vital that you identify the risks that are most likely to affect your business and implement a risk management programs that will be effective and successful.