Reducing Your Risk: How to Perform a Risk Assessment for Your Business

Asses Your Risk

Do You Know Your Business’s Potential for Risk?

You can be breezing along just fine in your business one day and, suddenly, be devastated the next instant by a crisis. In fact, the number one thing SMEs (small to medium-sized businesses) overlook today is their potential for risk. You can be affected by one of a number of issues, especially if you are working online. For example, an IT breakdown can cause a business interruption that can cause substantial financial loss, loss of customer confidence, and, most of all, loss of clients and revenue.

The Template for an Assessment – A Business Impact Analysis

So, it’s imporant to conduct a risk assessment in order to identify certain hazards and evaluate how such a potential crisis or disaster may impact your business’s reputation and earnings power. Conducting this kind of assessment is known as a BIA, which is short for a business impact analysis – a type of evaluation that measures the possible outcome of a business interruption.

Look for Weaknesses

So, if you conduct an BIA, you need to consider one of a number of varying hazards. For example, where is your business located? If you live in an earthquake or hurricane zone, then you need to take that kind of environmental  risk into account. Also, you need to think about the people and other resources that are vulnerable. A business impact analysis should be conducted with respect to property damage, supply chain disruption, IT breakdown, and mechanical inoperability.

How Would Certain Risks Affect Your Customers?

Also, what would be the effect of certain hazards be on your customer base? For instance, how would a hazard, such as a utility outage during the winter, affect your customer relationships? What kind of incidents could cause clients to lose trust in your company or the types of services or products that you are selling?

Safety and Security – A Major Consideration

As you make your evaluation, search out certain vulnerabilities that could lead to a hazard issue. Some of the weaknesses you need to consider include deficits in your IT system – such as security or protection. Also, think about how your building is secured and safeguarded. For example, a fire sprinkler system should be included in any commercial property.

Perform a Risk Assessment to Reduce Risk and Protect Your Business Interests

When you’ve made a risk assessment, you can then determine the amount of liability coverage you should buy for your business as well as what type of security and back-up system you need for your company’s IT. Again, a risk evaluation is essential for any SME who wants to stay operational during any crisis event.