The Fundamentals of Small Business Risk Management

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Aug 6, 2015 5:17:55 PM

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The Fundamentals of Small Business Risk Management

Entrepreneurs are no strangers to risk, nor are they likely to shake in their boots when threats proliferate and face their businesses, as this is such a big part of starting a new company. The small business sector has long been among the most at-risk, regardless of which industry the firms might be competing in, because there is such a small margin for error among companies that have not established a strong foundation and passed through the rigmarole of early growth. 

From natural disasters and data breaches to high employee turnover and beyond, there are countless threats to continuity that must be faced head-on to ensure the integrity of operations and financial performances over time. Luckily, a proverbial universe of new technologies has hit the market, which comes with direct and inherent advantages in the continuity and recovery equation, while intelligence solutions might be the best weapons in an entrepreneur's risk management tool shed. 

Risk evolves quickly and can change with the seasons in some situations, especially those pertaining to natural disasters during hurricane season or the winter. Small-business owners who effectively refine their practices to ensure yearlong continuity and resilience to disruption will tend to be better positioned to excel in competitive marketplaces, as maintaining regular operations in the face of threats can be a natural brand-builder in the eyes of current and prospective clientele. 

If you would like a quick overview of some of the more common mistakes entrepreneurs make when approaching risk management, check out this short video from an insurance provider on the topic:

So, as is the case with virtually every component of small business management, entrepreneurs need to first understand the basics and pin down fundamental requirements of risk management before moving on to more robust and advanced strategies. In today's risk-filled world, small-business owners who are more focused on leveraging technology to progress their recovery and continuity plans will be in a good position to survive and thrive in the coming years. 

An inclusive plan
Planning is key in risk management, and to be forthcoming, there is no cookie-cutter approach that will work for all firms, as small business objectives, threats and other matters will be unique to each individual situation. However, plans should cover the following, defined by the specific needs of the company:

  • People: The employees on hand will dictate the success or failure of risk management strategies, so make sure they are supported in their endeavors. Communication plans and contingencies for when the office is inoperable should be the priorities, while training and testing should also be considered in these aspects of the risk management strategy. 
  • Process: Policies should be ironed out, refined, evaluated and constantly kept in check to ensure that the guiding principles of the strategy are relevant, effective and accurate. Get as many managers and employees involved in the creation of these processes as possible to ensure that these are not only comprehensive, but tightly aligned with the needs of each department. 
  • Technology: If you are not already leveraging advanced cloud services and unified communications frameworks for general operations, you ought to consider deploying them soon. These tools can have profound impacts on risk management success, but will also need to be covered in the strategy to ensure the assets are prepared to overcome threats as they proliferate. 

When these three core aspects of operations are adequately covered by the risk management strategy, small-business owners will be far better positioned to avoid major outages, disruptions and loss, regardless of which threats might come along. However, never approach them in a disparate fashion - instead, focus on the establishment of a centralized strategy that brings them into a common and streamlined management structure. 

Entrepreneurs need to get the basics of risk management right. Entrepreneurs need to get the basics of risk management right.

Efficiency and speed are key in risk management, and unifying the various aspects of operations in need of the most protection can go a long way toward safeguarding the company's bottom line. Remember, these efforts will pay off dividends in the long run, as downtime can hinder brand image in the eyes of clientele, while coming with high direct costs that can quickly throw firms off their profit margin trajectories. 

Solution deployment
Much like the planning aspect of risk management, technology oversight and utilization for these purposes must be adjusted to reflect the unique needs and objectives of each individual small business. For example, a manufacturer will not likely have the exact same list of risks in need of mitigation as a retailer, and trying to fit a square block in a round hole will often do little more than simply waste money. 

Enterprise risk management software offered through the cloud can be a great first deployment in this discussion, as it will often streamline the various procedures and accounting practices that must take place to shore up defenses against threats. In that same vein, cloud computing software of various kinds, including collaboration and communication tools, will often be invaluable when a disaster or other threat comes to pass. 

"Cloud-based data backup is always recommended."

Cloud-based data backup is always recommended, as the technology can work to ensure that information is not lost or irretrievable following a major event that knocks out primary storage environments. This will also work to the advantage of small businesses by making the information accessible from a wider variety of locations, which has obvious implications for risk management strategies. 

Finally, UC frameworks can help companies to operate at full steam even when disruptive issues come to pass, thus strengthening the risk management strategy from the bottom up and maximizing resilience to downtime. Voice over Internet Protocol, video conferencing and instant messaging services are all available to keep staff members on the same page when disastrous issues begin to arise. 

Try to work with a provider that offers UC and cloud services and has a background in risk management support to ensure that the right choices are made in the investment stages, and that the entirety of IT and UC are integrated properly for optimal performance. 

Topics: Business Continuity