Identifying, and more importantly, managing risk is a critical part of better business management. Life doesn’t always go as we plan or expect. Last years floods, the bushfires earlier this year and now the COVID 19 pandemic are pretty good examples of this.
Should we have foreseen these events? Probably but Possibly not their concurrence or their severity. But come what may I think we will be more mindful of them as possibilities in the future. And being mindful of them means that we can develop plans that might better enable us to deal with them should they happen again.
Natural disasters are one thing but they are by no means the only, or indeed necessarily the most dangerous, of risks that businesses face. Businesses face risks in pretty well every aspect of their business plans. There are market risks, people risks, business environmental risks, legal and compliance risk, and finance risks, simply to name a few
We need to recognise the risk that some of the assumptions underpinning our business Plan might not in fact work out.
Having identified our risk exposures we need to then develop a risk management matrix which firstly assesses the likelihood of the risk actually happening and then secondly assesses the potential severity of their impact. Risks that are highly likely and will have severe impact will require more serious risk management strategy development attention that the less likely, less impacting risks.
In looking to identify risks we need to be far reaching and really look outside the square. I have one client who lost a considerable amount of money due to a cyber attack. The email account of the Chief financial officer was hacked and used to instruct the accounts payable staff that a major creditors bank account details had been changed. This resulted in a significant payment being totally lost. It was enough to actually imperil the entire business.
Development of a risk management framework and plan is simply a must do management function these days. We would be very pleased to help you with this for your business.