Business and risk go hand in hand. One does not gainfully exist without the other, and equitable risk management can directly describe many businesses’ successes. However, a fundamental difference exists between the risk that describes stock market movements and the risks that threaten a business’s longevity.
There are many risks that a growing business needs to consider to continue growing safely. These are fundamental and should form the basis for any business’ growth and resilience plan. But what critical risks do companies face, and how can they be adequately addressed or mitigated?
Risk to Assets
The primary route by which risk is usually understood is about tangible assets. The risk of losing something is a risk well understood by all and one that can indeed be extrapolated out to whole businesses. Assets can be lost through theft, burglary, or criminal action by another staff member; legal action could threaten the safety of certain business assets, as could bankruptcy.
Corporate risk describes the framework of the business itself and its agility to handle itself in difficult times internally and externally. Corporate risk is an umbrella of existential risk, often posed by executive staff members or the organization’s configuration. Fraud is a significant corporate risk and one that carries numerous risks alongside itself.
Contracts and Disputes
It is an unfortunate fact of professional life that your business is somewhat likely to encounter risk via a third party. Whether you have outsourced specific skills to other vendors, relied heavily on a specific supplier for your manufacturing purposes, or even leaned on a solicitor for legal clarification regarding a purchase or product, you will understand the severe risk of anyone’s failure to provide appropriately.
In the latter case, this can be incredibly disarming. Solicitors are usually dependable actors with a great deal of deep and specific knowledge to assist in navigating certain situations. Their failure to properly advise your business could cause financial and legal difficulties, to say nothing of the reputational damage that a misinterpreted regulation could engender. Some of this risk can be offset by professional negligence claims against solicitors, wherein losses can be recouped via civil means.
Speaking of regulations, it is paramount that your – or any – business meets the legal parameters of its industry. For example, for any business in the food industry, this would mean following the Food Standards Agency’s frameworks to the letter. Failure to do so can expose your business to legal ramifications, including fines and potentially punitive action against specific executive staff members. These regulations are here to protect other businesses, protect the market, and, above all, protect human life.