Risk is inevitable in parts of business just as it’s inevitable in parts of life. Many people get into business and entrepreneurship in order to enjoy these risks and the rush of adrenaline they get when they strike last-minute deals or make high volumes of sales. But, ultimately, mature businesses look to avoid risks rather than court them. This article is about avoiding risks that could damage your business, helping you plan for the future without worrying that you’ll experience damaging setbacks along the path ahead.
Spot the Risks
In the now-famous words of Donald Rumsfeld, the riskiest facts and figures are the ones we don’t know about – the ‘known unknowns.’ In order to gain a better understanding and insight into the risks that can affect your business, it’s a smart idea to sit down with some of your managers or the core team in your company and discuss all of the risks you feel might affect your company. These might include:
- Legal challenges and court cases
- Market fluctuations
- New laws that change your business direction
- Regulations and compliance issues that you’ve not anticipated
- Staff shortages and peaks in demand that you cannot meet
A risk that you’ve expected is always a good deal easier to deal with than one that comes out of nowhere. Spot the risks, note the risks, and you’ll be able to plan how to avoid them in the future.
Avoiding Risks
Some risks can be actively avoided. If you plan ahead, and see that you might experience a significant setback in the not-so-distant future, you can alert your team, enact strategies, stop your investments, and place cash in reserve to deal with that risk. Without planning and forethought, you’ll find it difficult to deal with these risks as they happen in real-time.
Of course, there are some risks that you cannot avoid. These risks need to be prepared for so that you’re in the best possible position for when they arrive at your door, and for that, you’ll need a separate risk avoidance strategy.
Preparing For Risks
The most important risks to avoid or deal with are those that could potentially damage your business beyond repair. These are likely to be chiefly financial, although a business’ reputation is also incredibly important, especially in an age of viral social media content that is quick to point out the flaws in companies around the world.
Just as in life, one of the best ways to avoid crippling financial risks is through insurance. As a business leader, you should look at top policies of business liability insurance in order to protect your business should a third party come to harm that you’re liable for. Without this insurance, that third party could launch a court case against you that can place you and your business in a dire financial position.
Mitigating risks is part and parcel of your daily life – and it’s just the same in business. Use these strategies to spot and avoid risks before they come to damage your business, and in doing so, secure your healthy financial future.