There isn’t a single business in the world that doesn’t face some sort of risk. Risk can come in many forms, from potential accidents and injury in the workplace, losing money due to business downtime or poor decision making, receiving a fine for not being compliant with the law and so on. Because every business faces risks, can a business really be profitable without any form of effective risk management?
It’s possible, but it’s a highly unlikely outcome in the long term. In this article, we’ll take a closer look at risk management and how it can help ensure that your business does make a profit. Without risk management, business owners could eventually find themselves out of business.
What Is Risk Management Exactly?
True risk management is more focused on identifying problem areas early on, so something can be done about them before they can present an issue. It’s far more about prevention rather than finding a cure.
In order to achieve this, business owners, management staff and employees all need to come together and brainstorm risk management strategies. This enables those in charge to compile a list of potential issues and create strategies to alleviate those risks and prevent them.
Risk management is an ongoing task, as new risks could emerge at any given time; especially if the business is expanding and growing in different directions.
Some larger businesses even hire professional risk managers to oversee all aspects of risk management, but even if your business isn’t in a position to hire a risk manager full-time, risk management still needs to be an integral part of your business planning and operations.
How Risk Management Can Ensure Profitability
One of the things that can really hamper profitability in a business is any sort of downtime in operations. This could mean a store being closed for days, operations being shut down in a manufacturing plant, the inability to deliver orders and supplies and so forth. Any downtime in a business usually equates to money not being made during that period. Or worse, the business losing money.
Effective risk management can also serve to help protect the reputation of your business and your brand. This is vital in today’s world, as so much emphasis is placed on positive branding and presenting a clean image. With something as powerful as the internet at everyone’s fingertips, it’s very easy for any negative press about your business to spread far and wide in an instant.
A profitable business is generally made up of happy and content workers. Without risk management taking place, your workplace could end up being an unsafe place to work, where injuries often occur or, at the very least, processes are not efficient, which leads to a disgruntled and unenthusiastic workforce. If the business is pervaded by a lacklustre work ethic due to the above conditions, chances are your enterprise is going to either stall, or start to lose money.
Risk management can also lead to making sound and educated business decisions based on risk versus reward. A lack of risk management could see decisions being made on hunches or without much thought whatsoever.
There are numerous ways that effective and ongoing risk management can lead to continual and increased profits for your company, so it would be irresponsible and somewhat reckless not to give risk management strategies a fair amount of attention.
Dedicated ERM Software Can Help Enormously
Dedicated enterprise risk management solutions in the form of risk management software can make the task of risk management so much easier. This software can be designed and tailor-made for your business in particular and allows you to easily monitor risks in your business, be alerted to potential problems before they present an issue, allow business owners and managers to analyse business processes, and even help you remain compliant with the laws that govern your industry. You’ll also be able to print out reports when required and many of these software programs come with mobile apps, so you can manage risk when on the go.
While it’s not impossible for a business to be profitable without risk management, why take the risk? Effective risk management is designed to ensure your workplace is safe, that operations run smoothly and that the business continues to make money.