If you are tempted to ”eye roll” if someone starts talking about risk management, it’s worth remembering ‘risk’ can be one of your company’s ‘best friends’.<\/p>\n\n\n\n
A bit of scene setting<\/em><\/strong><\/p>\n\n\n\n In business, you are no doubt familiar with operating with a level of uncertainty and risk. After all, you are constantly making decisions with limited information and reacting to changes internally or externally.<\/p>\n\n\n\n To stay in business, you keep a close watch on your finances and have a good idea how sales of different products or services are contributing (or not contributing) to your bottom line. You compare products and services and figure out your best performers, based on margin and volume and other financial metrics.<\/p>\n\n\n\n But just looking at current financial performance might not be enough. If you are not already taking steps to ‘anticipate the future’<\/em> using risk management, read on!<\/p>\n\n\n\n Upping your focus on risk<\/em><\/strong><\/p>\n\n\n\n So, how can monitoring risks, right alongside other performance metrics like contribution margin trends for each of your products or services, help your business?<\/p>\n\n\n\n Adding a risk assessment next to your financial bottom line for each of your markets, products or services, and other key aspects of your operations (supply chain, financing, people resources etc), can be a simple step, but one that can give you a different perspective on the future of your sales and your revenue performance.<\/p>\n\n\n\n Think about the likelihood of potential changes impacting your business in coming weeks\/months (e.g. customer complaint, a new competitor, being undercut on price, a major weather event, change (up or down) in consumer demand, a cyber breach or website issue, supply chain issues, change in government funding etc).<\/p>\n\n\n\n What risk mitigations (up advertising, introduce a loyalty program, build up your savings\/reserves, hedge\/insure, increase efforts to grow new business etc) have you already got in place? Are there other actions you can take?<\/p>\n\n\n\n If the likelihood <\/em>and consequence <\/em>of a risk are both low, you may not need to take action, but if you identify early a “change” that could hit hard, and this gives you a chance to take early action and reduce the impact, this could help improve the outcome for your business. And don’t forget ‘change’ could be a new opportunity! <\/p>\n\n\n\n Because you’re looking ahead and you know your business, you can work through a couple of scenarios regarding what might occur and what actions you could take to either reduce the risk likelihood or the impact or to grab the opportunity. You can consider the bottom-line cost\/benefit of taking action and the level of risk (e.g. low or high) and decide what action, if any is “worth it”.<\/p>\n\n\n\n Next Steps and a final word<\/em><\/strong><\/p>\n\n\n\n If you are thinking “this is a lot of work”, remember that after you have done this exercise once, you need only update <\/em>your risk analysis. This gets easier each time and you will get better at it. You will progressively weed out ‘risks’ that are not really significant or are hard to truly ‘control’ and recognise if an opportunity is actually a good fit with your business.<\/p>\n\n\n\n Using risk well can give you better insights about your current and your future business performance, help you find some moments to focus on the future, and, just maybe, help you develop a series of actions or tactical responses to change, ready to be put in place if needed that could make a real difference to your business outcomes.<\/p>\n\n\n\n End.<\/em><\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Are you treating risk as a good business friend?<\/p>\n","protected":false},"author":2,"featured_media":238,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[10,9],"class_list":["post-231","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-risk-management","tag-business-performance","tag-risk"],"_links":{"self":[{"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=\/wp\/v2\/posts\/231","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=231"}],"version-history":[{"count":5,"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=\/wp\/v2\/posts\/231\/revisions"}],"predecessor-version":[{"id":242,"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=\/wp\/v2\/posts\/231\/revisions\/242"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=\/wp\/v2\/media\/238"}],"wp:attachment":[{"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=231"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=231"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodbizconsulting.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=231"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}