An internet search on Risk Management Techniques yields lots of results on subjects like insurance, OSHA standards, financial safeguards, issues related to environment protection and sustenance, government legalities, and computer backup systems. While all these are elements of risk control, they do not in themselves help your business to identify the risks it faces.
The Five Point Risk Management System
The success of a Risk Management System requires a business owner to comprehensively follow the steps laid out in the system and practice strict adherence to the rules. A good Risk Management System should include the five steps below:
Sources of Risk Management Expertise
A good time to set up a Risk Management System is at the time when you are formulating your business plan. At this stage, when all aspects of the business are being examined and discussed, risks also get discussed and examined. Setting up a Risk Management System at this stage will help you to go over your risks from the very beginning. Engaging a Risk Management Specialist at this stage and taking them through your Business Plan is invaluable. A robust Risk Management Process could also help you get better financing, as it will definitely help convince the lending source that lending money to your is a safe bet.
As unnecessary as a Risk Management System may seem when running a business, especially a small business where any perceived losses are small, a good Risk Management plan helps to ensure the continuity of your business. While it is unrealistic to expect that drawing up a Risk Management System will shield you from all risks, it is comforting to know that it will at least protect you against most risks. It is also important to remember that every Risk Management System has to be periodically reviewed and updated to cater to growing and changing business needs.
A good Risk Management System will help you reap the rewards of your efforts to set up and run your business.