Successful businesses can manage risk intelligently. Without accepting proper and reasonable risks, there would be no opportunity for reward or progress. The key to longevity and profitability is knowing when a gamble is worth taking and how to manage it. Integrate the following five tips from Rory Angold, a results-driven manager, and team leader, to help manage risk in business.
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Involve Everyone In Risk Management
Put an end to team members taking a “look the other way” approach to risks. When people take for granted that a manager is responsible for all risk management, they either become disinterested or desensitized to it.
Give power to everyone involved in a project to be active and vocal in identifying and assessing threats. Reward and incentivize employees who are engaged in risk management. Seek active input from every team member in risk analysis and prioritization.
Prioritize Risk
Every analysis must include a determination of how significant a given risk is in the context of a project. Establish criteria for how serious a threat is by studying possible comparative losses against gains and how likely a negative outcome is to occur as a result of an identified risk.
Based on applying criteria consistently, you can determine which choices are the most dangerous and which are acceptable. Risks must be continuously analyzed and prioritized at each level of your organization. What one department or person may see as a remote or insignificant threat may look much more dangerous to another.
Plan For Risk Response
Some best practices are apparent, and others are developed over time through experience. Open communication among all team members about risk management helps develop advanced management plans for accepting and minimizing risk. Planning for adverse outcomes is an integral part of the assessment.
If a risk can be mitigated through additional effort that is feasible and can be implemented quickly, it is more objectively acceptable than outcomes that cannot be adequately addressed. Communication is vitally important to organizational learning and understanding which possibilities can be mitigated and which may lead to problems that can be impossible to repair.
Limit Liability And Insure Against Risk
If your business is operated as a sole proprietorship or as a simple partnership, consider whether forming a corporation or limited liability company (LLC) might be a better solution. When adequately developed and operated, corporate structures allow business owners to limit their exposure to loss to the assets owned by the business and not their personal estate.
Depending on the structure of your business, a variety of insurance products are available that can address certain risks that cannot be avoided otherwise. For companies with multiple owners and managers, life insurance and disability insurance can help prevent interruption or termination of operations.
Professional and operational insurance is essential for many types of external threats that are often outside of your control. General liability insurance for different kinds transfers much of the daily risk your company faces to an insurer.
Work Diligently At Quality Assurance
A structured quality assurance program can protect your business’s reputation in ways that you may not otherwise observe. Product testing and advanced customer service help to ensure that customers are happy with what you are selling, which often goes far beyond the nuts and bolts of your products. Consistent and ongoing quality assurance allows you to make changes as necessary quickly and quietly before something simple becomes a crisis.
About Rory Angold
Rory Angold has two decades of work experience in leadership and executive positions. He last managed field teams in California, Nevada, Hawaii, Oregon, Arizona, New Mexico, Colorado, and Wyoming for Zurich Direct Markets, a $1.5B business.
Mr. Angold is a results-driven specialist in automotive dealer consulting, training, and reinsurance with a proven track record of developing people, putting together a winning team with an infectious culture that empowers people to want to win.
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