The events of 2020 forced companies to adapt, virtually overnight, to a volatile commercial environment. Businesses needed to immediately (and in most cases reactively) implement tactical risk management strategies to be able to continue to deliver their products and services in the midst of a global pandemic.
If you’re a small business, it’s now up to you to combine your cumulative learnings from 2020 and apply them to your business to ensure you’re as ready as you can be for the unexpected.
Risk management is essentially the process of mitigating the negative impacts of dangers or threats to the business.
Different businesses will face different risks, and all owners and managers will have varying risk appetites. So, while every business should definitely have risk management plans and procedures in place, exactly what is involved will be unique to your business.
Small-business risks fall into several key areas:
A considered approach to risk management (including risk analysis) will assist you in safeguarding those areas where your business might be vulnerable.
Managing the ongoing impact of COVID-19 on your business will continue to inform our “new normal” in 2021 and beyond.
So, be prepared. Compiling – then managing – a risk management plan is fundamental for any business, no matter the size. How and why you have chosen to treat risks should be outlined in your plan, and it’s important to review it thoroughly and often to include any new risks associated with any changes in your business or improvements in techniques for treating risks.
Because eliminating all risk is impossible, risks are minimised via your quality control processes. Reduce risk by:
If a risk is beyond your control, a comprehensive risk management framework will help reduce its impact.
The mass transfer of Australia’s workforce during 2020 proved that, when necessary, widespread adaptation can take place with little warning and minimal impact on productivity.
The businesses which best survived lockdowns did so by adapting best to unprecedented circumstances, and the takeaway for small business throughout has been that flexibility and agility are the keys to survival and success. Preparedness is key when it comes to risk management. No business is 100 per cent insulated against risk, but all businesses should take steps to be prepared for it.
Mellissa Larkin, Founder and Managing Director, Peripheral Blue