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How to spot and manage risks

Business owners deal with risk every-day, even if they don’t always realise it. That’s why it’s vital to have a risk management plan in place that works for you.

Be informed: why risk management matters

Not many entrepreneurs start in business to be risk managers, but the events of the last few years have highlighted just how important it is to prepare for disruption.

Watch our video to learn about potential risks, how to put a plan in place to handle them and the benefits of good business continuity.

Be inspired: create a risk management strategy

Look out for our film with Rob Williams, director at Hawthorn International, who shares his expertise and insight on risk strategy and business continuity plans.

Hawthorn International’s position as part of a global supply chain means it's had to deal with a range of risks in the last couple of years. Rob will explain how he manages it. 

Be successful: make your business more resilient

From Covid-19 to the supply chain crisis, preparation rather than reaction is the best way to stay strong and resilient in the coming months and years.

Use our Business Builder checklist (below) to help you get started on a plan.

Become a more resilient business

1. Look back at the challenges you’ve faced since starting a business

Some of these obstacles could come up again in the future, so think about how you dealt with them, what the results were and how your response could improve next time.

 

2. Consider the other risks your business faces

Every business and every industry has its own set of risks to contend with. But what are yours? Only when you’ve identified potential causes of disruption can you start putting measures in place to avoid or lessen the negative impacts.

 

3. Talk to peers about their risk management strategies

If someone in your industry is further in their business journey than you, there’s a good chance they’ve dealt with more disruption – find opportunities to learn from their experiences. Chatting to others means you could find new risks you hadn’t thought of, but also tested ways of managing them.

 

4. Identify the essential areas of your business

What does your business need to run smoothly? Some areas – like personnel, cash flow and technology – are relevant to everyone, but there may also be areas that are unique to your business. Whatever you identify here should be your priority when creating mitigation and response strategies.

 

5. Look at non-critical functions

These should still be part of your continuity plan, even if they’re not vital in the short term. Take marketing, for example; your business may be able to survive for a short period without it, but in the long term you’ll still need to reach new customers.

 

6. Take steps to minimise the risk of disruption

Some types of disruption are in your control, and a bit of short-term investment – whether time-based or financial – could save you stress and money in the long term. Some basics to start with are enhancing your level of business insurance and installing the latest security updates on your computer system.

 

7. Avoid taking shortcuts

Cutting operational corners will leave you more open to risk. Cleaning is a great example; if it’s not done properly, the chances of an employee or customer slipping and becoming injured will increase – you’re then at risk of closure and even legal action. This is just one area where professional support is easily justified; others are marketing, accounting and property maintenance.

 

8. Keep up with regulation and legislation

In the age of Brexit, climate change and Covid-19, business regulations and legislation are constantly changing. If you’re to minimise the risk of fines and fees, you’ll need to stay up to date with the rules affecting your business.

 

9. Make step-by-step plans for unavoidable disruption

As the pandemic proves, some obstacles are out of your control. What you can control, though, is your reaction. Having real, actionable ‘what if’ steps written down before something big happens will help you to create and test a disaster plan that focuses on the essential areas you identified earlier.

 

10. Revisit and revise your strategy regularly

The risks your business faces will evolve – some will ease, others will grow and new ones will develop. Your approach to risk management must evolve to account for these changes, so make it part of your plan to audit and revise your strategy at regular point of the coming months and years so that you’re always prepared.

Further reading

For more insights on risk management, visit NatWest Business Hub.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of the NatWest Group Economics Department, as of this date and are subject to change without notice.

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