There are myriad of things you need to think about when coming up with a financial risk management plan, from making sure to monitor financial risk to keeping your employees protected, but here are five tips to help you get started down the path.
General Business Risks
One of the first steps in coming with a financial risk management plan is to take a look at your overall business risks. Ask yourself some questions like, what will happen to my business in a recession?
How will my business handle new competitors? How will my company manage the normal ebb and flow of business? Depending on the nature of your business, you might find that you have times when sales are high and things are going well, but then run into days, weeks or even months when sales are slower.
You need to make sure that your plans take into account these slower times.
Employee Risks
Good employees can help your business expand and generate more revenue, but they also can introduce financial risk to your business. Before hiring anyone to work at your business, you need to check their references no matter how good their resume is or how qualified they seem.
Not only is it imperative to check references, but it’s very important to properly train your employees on company policies. This includes safety policy. If your employees are working with machines then it’s important to ensure that they have industry-specific safety training.
Fortunately there is industry-specific safety training available online from OSHA.
Liability Risks
Liability risks can sink many small businesses. Reducing or eliminating these liability risks are an important part of developing a financial risk management plan.
Not only is their property and product liability concerns, but your employee risks can give you liability exposure. It should go without saying that you need to get liability insurance for your business.
Talk with a business liability insurance agent. He will give you an idea about the industry-specific liability risks that you might have and ways to mitigate those financial risks.
B2B Risks
Every business has B2B business, even if they are solely a consumer-facing business. They have vendor arrangements that can include both buying and selling. Not everyone runs their business well and some businesses have problems managing credit.
It’s very important that your business has a robust credit and risk analysis policy when dealing with any other business.
Just like there are tools to check personal credit ratings, you can also check the credit reports of other businesses with tools like CreditRiskMonitor. This is should be a standard practice before initiating any transactions that could lead to financial risk for your business.
Fraud Risks
Fraud costs businesses billions of dollars every year. Fraud comes in many different shapes and forms from cyber fraud to retail fraud to B2B fraud and everything in between.
Your company needs to put into place policies to limit your fraud exposure. Training employees on how to recognize phishing emails and how their internet safety can reduce the risk of cyber-related fraud.
Likewise, training retail employees how to recognize credit card or check fraud can reduce those instances as well. Make sure employees know the policies and know their frontline importance in the battle against fraud.
With the right financial risk management plan, you can protect the financial interests of your business. Instead of worrying about financial risk, you can focus on doing what you do best.
