If your business plan does not discuss risk it may in fact make the company more vulnerable, especially if you’re not aware of the market or industry shifts that can affect the viability of the company overall. A risk management plan can help minimise the impact of cash flow issues, damage to brand and other risks. It will also help create a culture of sensible risk awareness and management in your business.
Risk Taking
So how can you determine which business risks to discuss in your business plan?
Certainly some risks carry a higher probability than others. Natural disasters, for example, can’t be predicted and they are the same for every business so in most cases, it’s safe to leave these kinds of risks out of the business plan.
Instead, think of risks that are specific to your industry. If you’re in the restaurant industry sector, supplier risk is significant- if you lose your source of ingredients, you can’t make the food. Same goes for permits and licences.
Technology shifts can also undermine a business, and these can be hard to predict. Many large corporations have been unable to recover from the effect that frequent technology advancements have had on their profitability. If your business produces or relies on a specific changes could affect your company.
There are quite a few risks that most businesses have in common. As well as listing the risks, it’s also useful to list what the consequences could be if the risks actually happen. Consider the following types of risk:
• Compliance
• Employee
• Environmental
• Health and Safety
• Operational
The Quinn Group can review your risk management plan or prepare a plan for your business. Call 02 9223 9166 to organise an appointment or submit an online enquiry.
