Small Business Risk Management

July 8, 2013, 9:42 am David Koch Yahoo7

Risk management is a daily challenge for small business owners.

Small Business Risk Management

Everything from ensuring your staff are adequately trained to watching out for small hazards around the workplace falls at the feet of the person in charge.

But it doesn’t need to keep you awake at night. With good planning you can minimise the risks you’re exposed to and get on with building the business.

Here’s how to get on top of your risk management today.


The first step in drawing up a risk management plan is to identify every compliance, employee, financial, political, economic and environmental risk that the business faces and estimate the potential cost of each of those risks coming into play.

Dig around, brainstorm with staff and really get the full picture of what the business might come up against. Engaging staff is especially important for technology and online systems where they might be better informed about that you.

By drawing up a comprehensive list and collecting information on each risk you’ll be able to make informed decisions on how to manage them and ensure every member of your team is in the best position to deal with them.

But that doesn’t mean going overboard to safeguard against absolutely everything. You need to prioritise them.


Once you’ve put together a comprehensive list of risks facing the business, go through and identify the most important risks based on the likelihood of them occurring and the potential cost to the business. This will draw out the key areas to address.

Keep in mind that this process is all about ensuring the business can still operate and pay the bills, whatever happens.


Now in terms of managing risks, some will be basic workplace procedures like storing tools in their correct places, reviewing maintenance sheets for equipment or having staff accreditations on file.

This is simple stuff that can save a lot of lost time and money, and once good procedures are in place they will become second nature and often improve the efficiency of the whole operation.

Other risks will require insurance cover to manage the threat to the business. Things like employee injury, car accidents, public liability and theft simply can’t be protected against by in-house policies. And often it’s these big risks that can send a business to its knees if it’s not prepared.

Sadly, I’ve seen it happen first hand with the spate of natural disasters in recent years.


There are four main areas of business insurance; property and assets; public, professional and product liability; workers compensation; and motor vehicle. And that says nothing of the hundreds of different policies within each area.

One of the policies outside these areas is business interruption insurance, which makes sure that the financial position of the business returns to where it was before a disaster hit. Your insurer will assess your profits and turnover and factor in seasonal variations, but you do generally need to have a property policy to be eligible for this type of cover.

It is a big area to navigate, but armed with a list of the key risks you need to insure against the process will be much clearer. Your best bet is to complete your risk management review and discuss this with your insurer to get a level of cover that you are comfortable with.

Unfortunately, the thought of risk management and insurance comes too late for a lot of business owners, so if you haven’t done your duty then sit down and assess the risks facing your business today.

It will certainly help you sleep at night.

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