Risk identification, assessment, prioritization, and mitigation — collectively referred to as risk management — are all important steps in protecting your business, your workers, and complying with the law. Risk management is a complex process that not only involves evaluating resource risks, technology risks, and business risks, but also taking steps to minimize said risks.
A manager or business owner can make this complicated process easier through using a small business risk management checklist. A risk management checklist not only strengthens the controls of your business, but serves as a tool for discussions with your insurance agent.
When devising a small business risk management checklist it’s important to focus on the risks that matter the most to your business and your workplace. In other words, your checklist shouldn’t be inundated with so many trivial tasks that it becomes difficult to manage.
Of course, any risk assessment or risk management checklist must be geared toward the unique needs of the business, a general template can be constructed from the following risk areas:
1) Evaluate resource risks – These include organization, people, and time. For example: Is funding adequate for projects? Are employees skilled to carry out critical job duties? Are project time lines and deadlines realistic?
2) Evaluate business risks – The main areas of business risks include strategic, compliance, and financial. For example, what is the risk of a strong competitor coming into your market? On the financial front, what is the risk of a non-paying large customer or an increase in your business loan’s interest rate? Depending on the industry your small business operates in, you may have other risks, such as environmental or health and safety.
3) Evaluate technology risks – In an ever technologically-advancing society, information technology risk is more pervasive than ever. Not only is there equipment breakdown and theft, but business now need to worry about the risks of data loss, security breaches, and server down times.
Keep in mind, risk management is much more that a checklist. A small business risk management checklist is simply a tool to help the small business owner make better decisions and put controls in place to eliminate and minimize risk. Risk management must be integrated into the day-to-day business processes and practices; it’s a dynamic process that must change and adapt as changes in the operating environment, expansion in new markets, or new products and services are introduced.