Summary: Conducting a risk assessment is crucial to a business’s operations. Understanding the risks your specific business faces and how to recover from them is key to your success. Find out what the most common business risks are and the steps involved in a risk assessment. Assessing Your Business’s Hazards and Risks
Most small business owners spend the majority of their time and efforts on building and growing their companies. Hiring employees, streamlining the operations, keeping inventory stocked, increasing revenue, and ensuring the business is running as usual, are generally the top priorities.
However, understanding and anticipating the hazards and risks facing your business, employees and location are also key to your success. Failing to prepare for the likelihood of a disaster, whether natural or man-made, can threaten the very survival of the business.
Identifying Common Risks Facing Businesses
If a disaster does strike, it’s unlikely your small business will receive advance notice. Disasters can come in many forms, and you should never assume your business isn’t at risk. Some locations have an increased risk for events like hurricanes or wildfires, but even if you aren’t in one of these areas, other natural, technological, and human-caused disasters could threaten your business.
Some of the most common hazards businesses can face include:
What is a Business Risk Assessment?
A business risk assessment involves identifying the potential hazards that could negatively impact the company’s processes, finances, building structure, and the employees’ overall safety. Business owners need to analyze their organization’s specific risks, identify where they are most at risk and create a
business continuity plan to ensure a successful recovery.
It’s important to understand the potential impact a disaster can have on your business. A business risk assessment is key in identifying all possible losses to create the appropriate recovery plans.
How Do You Conduct a Business Risk Assessment?
After a disaster of any sort, business owners need to act quickly to help minimize disruptions. This is why it’s crucial that business owners have a plan in place so they can ensure they are up and running as soon as possible. A business risk assessment involves the following steps:
Identify your specific risks
What types of hazards could your company face? Think of the historical disasters in your community. Is the area susceptible to severe storms like hurricanes? Is there a threat of earthquakes? Are there operational or technical functions and processes that might put your business at risk for a cyber attack?
Ready.gov offers a
risk assessment table to help you keep track of each asset or operation at risk.
Determine who and what is most at risk
Analyze each risk by understanding which elements of your organization would be most affected by the different types of events. For example, severe storms could impact both the building structure if there is wind or water damage, and also could lead to a disruption in operations if there’s a power outage. Employee risks should also be top of mind, as they could be injured in the event if they are working on the job site.
Analyze the costs and impact
When considering the recovery costs, it’s important to consider factors other than just the physical damage that may require repair. While equipment, supplies and inventory could need replacing, operations also may be disrupted for a long time. There could be regulatory fines to pay or breached contract fees. You could suffer reputational harm or lose customers following a data breach. While you may not be able to estimate the total costs, having some understanding of the impact and expenses you could be facing is vital to recovering some of the financial losses.
Continuously review the risks
Hazards and risks can evolve over time. Conduct risk assessments regularly to ensure an effective recovery and update your business continuity plan as needed. The risk assessment should be developed with the idea that updates will often be needed to adapt to changes.
How to Minimize Business Risks
After analyzing and reviewing your company’s specific risks, take steps to mitigate them. Working with a risk manager or an outside source for loss control services, you can learn what safety measures to implement to help reduce a disaster’s impact. For example, if your area is
susceptible to wildfires, perform routine maintenance to keep debris off your roof, create defensible space zones around your building, etc., to help minimize the damage.
Identify Your Risks with the AmTrust Loss Control Department
The AmTrust
Loss Control department specializes in risk management solutions to prevent injuries and improve employee safety. We can work with your team to identify the specific risks facing your business and implement safety measures to help reduce their impact. To learn more about our loss control services, please
contact us today.
This material is for informational purposes only and is not legal or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is appropriate or suitable for any specific business or legal purpose. Readers seeking resolution of specific questions should consult their business and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.