Why These 3 Risk Management Strategies are Critical for Your Business

There is an element of risk in any kind of business venture, regardless of company size or industry. There’s a chance that suppliers or vendors won’t be able to hold up their end of a contract. An accident in the workplace could lead to law suits, or cripple crucial operations for days or weeks at a time.

Being able to react to a crisis and recover from bad situations is crucial for any business leader. However, it’s also wise to implement a few proactive strategies to eliminate unnecessary risk and mitigate the effects of disasters if they do occur.

Protect Your Digital Assets

Small businesses are at risk of cyber infiltration and attack more than ever before. Cyber criminals are targeting small and mid-sized companies on a regular basis, and they can do a lot of damage if they compromise your system. Even automated viruses and malicious programs can have a profound impact on your productivity, and there is always a possibility of a public relations nightmare if customer data is compromised.

All modern companies that rely on computers for essential functions should invest in cyber security measures to protect their network. Since many smaller companies can’t afford to hire a full-time IT security expert, they turn to consultants to fill the gap. There are also many options for outsourcing networking and security duties to a managed service provider, who works with team members on a regular basis to upgrade and repair systems.

Read more on managed IT security services

Monitor Your Partner’s Credentials

Relationships between companies and their suppliers, vendors or other commercial partners are largely built on trust, but this trust shouldn’t be blind. Even if a potential partner company claims to be protected by sufficient insurance or have other key credentials, it’s a good idea to confirm this for yourself.

Many modern businesses rely on an independent third party, like Business Credentialing Services who specialize in certificate of insurance tracking, to make sure that contracts are upheld and verify the credentials of all parties involved.

Checking up on your partners before committing significant resources to them can be a sound business decision, especially when the stakes are high. Property owners and lenders can also turn to a credentialing service to verify information submitted by clients.

Screening potential renters is one of the biggest challenges when leasing a house or apartment, and recognizing one that has a bad record can save a lot of money in the long run.

Vet Your Employees

There are many different techniques that employers can use to manage risks by screening employees before hiring or promoting them. Conducting background checks, and sometimes credit checks, is a sensible precaution depending on the nature of your business. Small inefficiencies or incompetency can have a devastating effect on the value of your company, even if you don’t feel it on a daily basis.

Auditing and routine performance evaluations are also essential for gathering details about employee productivity and behavior. All key roles at the company should carry specific responsibilities with measurable results, so leaders have actionable information when making important decisions. This also means that you will have to make some hard choices when it comes to cutting team members who aren’t filling their role.

Learning how to manage risk is one of the most important duties of any business leader or manager. While you should certainly take basic preventative measures to protect yourself from urgent scenarios, it’s also important to be ready to survive them if they do occur.

All businesses need formal contingency plans that outline the actions to take in the event of an emergency, including natural disasters or sudden loss of key personnel. Contingency planning and preparing for crisis management could make the difference between weathering a storm and sinking to the bottom.

Author: Emma Sturgis is a freelance writer currently living in Boston, MA. She writes most often on education and business. For a masters in data analytics, Emma recommends Villanova University. Follow @vsb_online on Twitter and Facebook. To see more from Emma, say hi on Twitter @EmmaSturgis2.