Maybe you’re too busy. Maybe your outlook is “Don’t go looking for trouble.” Perhaps you don’t understand business risk management, and you don’t know if it matters for businesses that aren’t giants.
Just in case you’re not completely sold on the vital importance of sound business risk management for the health of your company, let’s examine some of the potential consequences of just rolling the dice and seeing how it all comes out.
We’ll go ahead and start with the obvious. Failing to ensure your company complies with all laws and regulations can increase the odds of your being sued, whether it’s by an employee, competitor or customer. Part of business risk management involves making sure your company minimizes its legal exposure by following rules.
Of course, you can be sued even if your company complies with both the letter and the spirit of the law, but the odds of the suit’s success may be diminished.
Lawsuits cost your company money, whether it’s from settling with a plaintiff, the cost of legal representation or from actual damages awarded in court. It makes sense to limit the risk of a lawsuit and to reduce the risk of its being successful. Business risk management addresses these concerns.
2. Catastrophic Losses
The failure to adequately evaluate, prevent and minimize damage from business risks can ruin your company entirely.
You could lose market share because you failed to predict the risks of changing conditions.
You could lose enormous investment dollars if you fail to anticipate the risks of expanding your company.
You could suffer irreparable damage to your company’s reputation by failing to prepare to manage difficulties.
Business risk management has serious financial implications. You can have much to gain from protecting your company… and potentially everything to lose by not.
In a perfect world, business risk management becomes part of the corporate culture, infusing every position and every decision. Building in risk analysis, even at the part-time employee level, can demonstrate that you intend to run a tight ship.
Conversely, failing to build risk management into your company can signal a lax attitude. And that lax attitude could be tempting and impossible to ignore for unscrupulous employees.
Unless there’s accountability and responsibility built into your company, you may be at risk of theft from your employees.