5 steps to master Risk Management
Every action that an individual takes, involves at least a small element of risk, and risk management is a part of life. It’s why you look both ways before crossing the street or wash your hands before making food. For businesses, it’s about the steps you can take to protect your income and property. Follow these steps and become a master of risk management.
So what is risk management?
Risk management is about taking steps to minimize the chances of things going wrong. You might think this goes against the mindset entrepreneurs, who take huge financial risks building companies and products, with no guarantee of success. Yet risk management is too important to ignore. Your business could be going brilliantly, but if you don’t have the right insurance in place a fire, or flood could put you out of business.
So risk management is about having insurance?
No, but this is a common misconception. Insurance is a large part of risk management, but it’s not the only thing to consider. There are plenty of steps that a business should take to reduce risks. Insurance is needed, for events out of our control, but claims are time-consuming, disruptive, and should be a last resort. Good risk management helps keep your business safe, as well as showing employees that they’re valued.
So today, we present VouchForMe’s five essential tips for a good risk management strategy.
Be a role model
Here at VouchForMe, we’re big fans of social proof, so one of the best ways to improve risk management as a manager is to lead by example. If managers aren’t adhering to safety guidelines or behaving ethically, it should be no surprise that employees don’t follow suit. All businesses need to be productive and efficient, but you should never compromise on safety to do so. If an injury occurs it’ll cost you more in the long run.
Set procedures, and stick to them
As the old saying goes, It’s better to be prepared than sorry! As a business owner, you should ensure that you’ve got enough first aiders on staff, that everyone knows where to go in case of a fire, and that things like fire alarms and extinguishers are in good working order. Smaller companies won’t need a full-time health and safety team, but you should still ensure that everyone knows their responsibilities. In the event of a workplace accident, you don’t want to end up arguing over who’s turn it was to restock the first aid kit!
Carry out a risk assessment
Depending on the industry you’re in, you might already have an idea of the type of risks that you’re likely to face day to day, a risk assessment can help you identify the chances of risks occurring, who they would impact and should they occur, how staff should react.
A simple template, like the one above for a community event, can help people avoid accidents, as well as ensuring that people know how to react.
Regularly Review Risks
Once you’ve got your procedures and risk assessment in place, it’s easy to get complacent and feel you’ve done your bit, so try not to do that. As your company grows you may find that new risks occur. Likewise, as new technology develops, certain risks are no longer relevant to your company, often it may be worth outsourcing a risk. (e.g. Hiring a security firm, or moving your data to the cloud.) So if you have a major business change, such as a change of location, or take on additional staff, make sure to check your policies.
Most importantly — Suitable Insurance
We know that we said risk management was a lot more than insurance, but don’t underestimate the importance of having either insurance or some form of income protection in place. Machines break down, people get injured or ill, occasionally an earthquake or flood will mean you need to shut up shop for a while. No matter how good your risk management is, you’ll never be able to reduce a risk to zero, so prepare for the worst-case scenario, make sure that you’re protected. While policies can be costly for freelancers, there are alternatives. VouchForMe’s income protection is peer-to-peer insurance that makes use of your social circle to ensure that you’ll still receive an income, even if you’re unable to work.
We’ve talked a lot about peer-to-peer insurance in this article, did you know that it’s already disrupted the insurance industry in China, and is set to shake it up in Europe and America as well? Join our webinar, April 4th, where VouchForMe’s Head of development and insurance industry veteran Ales will present our social proof model, and show why it’ll be the next disruptor for the insurance industry.