It’s undeniable that risk management is one of the most neglected aspects in most small businesses.
When you own a business regardless of its size, a risk management plan is highly imperative to have as recognising risk is an integral part for your business to not only survive but continue to prosper.
When you have an effective risk management put in place, you minimise possible risks that can negatively impact your business resulting in temporary setbacks or even irreparable damage.
Here are some useful tips for effective risk management for small businesses you can start applying:
1. Ensure you have the appropriate insurance coverage. Also, be sure to review the policy terms carefully on an annual basis to check if your amount of coverage is still adequate.
2. Have written policies and procedures in place to ensure your employees are being held to the industry standards of care and ethics of their job profession. It’s important you take the time to review these yearly with your employees. Do not include unrealistic requirements that will not be implemented by the Company or anything that is higher than the law requires.
3. Conduct frequent employee training and opportunities for education learning. Document all training provided to your employees, so you can always refer to these materials if you ever need to.
4. It’s good to have an open-door attitude where your employees feel welcome to raise any concerns about the Company’s practices without any hesitation.
5. It’s encouraged that you have effective tools for timely documentation and conduct random checks to ensure your team members comply to your Company’s rules and policies.
6. Ensure that your employees do not act outside of their professional qualification. For instance, your employee may be knowledgeable about legal or even finance, however, they do not have the license to provide these services to members of the public.
7. Making sure you have measures in place for protecting sensitive or confidential information of clients.
8. Always have documents recorded in black and white especially with contracts signed with your clients. Whether it’s through text, or verbally, ensuring these are recorded down can help you in the event a lawsuit is filed against you.
Each business has its own type of risks and identifying these can safeguard against financial losses. A good risk management plan should highlight adequate safeguards and the appropriate insurance coverage to compensate for financial losses and also a plan to prevent from these losses, and to manage unexpected risks that may happen along the way.
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*Please note all insurance policies have exclusions. Please refer to the Product Disclosure Statement or Policy Wording before deciding whether the insurance policy meets your needs.