What is risk
management?
If you run a small to medium sized business you might have
never heard of the term risk management. Sure we all can figure it out just
based on the words “risk” and “management” but what does it really mean? Well
the technical definition taken from Marquette University states that Risk
Management is “the continuing process to
identify, analyze, evaluate, and treat loss exposures and monitor risk control
and financial resources to mitigate the adverse effects of loss.”
Um…what? Did you get all of that? Me neither & I am in
risk management.
Now if you are like me and most other business owners, you
say ok, cut the technical mumbo jumbo and just tell me the basics please and
why I should care.
In a nutshell, risk management is looking at your company
from 50,000 feet in the air. It’s like what Marcus Lemonis says in The Profit: It’s
looking at your people, your processes, and your profits. Its preparing your
business from all of the what-ifs that could happen.
Why do I need it? I
have insurance. Isn’t that enough?
Now, I know you think, well that’s why I have insurance. I
have worker’s compensation for my employees. I have business insurance for slip
and falls or a fire, and I have anything else that I need. But there are things
that insurance doesn’t cover. Suppose a disgruntled employee leaves you and
decides to tell everyone how bad of a business you are and that results in a
drop in business by 20%? Or suppose an employee left and started a company
exactly like yours and started siphoning off your clients that you have built
up for the past 15 years. Can you afford to take these employees to court to
defend yourself and your business? Think about it, you are already down in
business from them, and then you can easily reach $25,000 - $30,000 in a few
short months defending a case that you might not win.
Or what if your local laws changed and said that you are not
able to sell your top product anymore in your area? Are you in an area that
minimum wage is going to be increasing up to $15 / hour?
The reality is that while insurance can help with many of
the unforeseen issues that could happen to your business, it is not a fix or
guarantee for everything. I have seen so many companies on the verge of going
out of business or lose everything in the blink of an eye because of simple
fixes that planning ahead could have helped.
Risk Management does that for you and your business. It not
only looks at your company from 50,000 feet in the air, it helps you as the
owner protect what you have built the last 10, 20, or even 30+ years. So what are
things that are covered in Risk Management? There are things like policies
& procedures manuals, employee handbooks, looking at your marketing &
PR, and yes the financial health of the company. The good news is there are
many resources online today that you can find specific to your industry to help
you plan for the future and protect what you have built today so you don’t have
to start from scratch.
Looking for more information on what you can do to include
Risk Management in your business? We have created a FREE checklist of the top 20 things you can implement today in your company to protect you and your
company.
Want to work with us? We love working with and helping small
and medium sized businesses. Sign up for more information and a free 20 minute one on one discovery call with our Risk Management team to find out how we can help
build a custom plan for you and your business.
