To calculate your small business risk factor, list and then categorize all potential risks. Assess the severity of the risks and order them in order of severity of damage to your business. Prioritizing risk will help you to create an action plan. To identify highest risk factors, consider the probability of the occurrence and severity of damage.
For more precise measurements, use a free tool or work with your insurance company. You can also get a general idea of your risks as a business by following these helpful steps.
Every business has a business plan that likely includes business risks. Identifying risks that can negatively impact the day-to-day operations of your business is a critical stage in your business planning. To identify the risks for your particular business, create categories and group risks in this manner so that you can then put actionable steps in place to mitigate or prevent these things from occurring.
Some common types of risks a company may face include:
- Physical risks– These are emergency situations that could cause serious damage to your building. This includes fire, storm damage, power outages, etc. Within this category, list also any hazardous materials stored in your building (i.e. anything with toxic fumes, flammable liquids, gas, etc.).
- Location risks– These risks are calculated by your proximity to nearby natural disasters, fire, storm damage, etc.
- Human risks– These are the risks associated with the individuals who work or visit your building. Drug or alcohol abuse, theft, or various forms of fraud are all instances of human risks.
- Technology risks- Risks that fall within this category would be power outages, power surges that could destroy equipment, and any telephone and communications failures that may occur. Any risks to hardware or software systems would be considered a technology risk.
Now that you have identified your risk factors as a business, what do you do now? Rank your risks in order of probability. When you have a clear picture of what risks are most probable, you can create a plan of action that pours your time and resources into the right places.
To prioritize risks, you can simply use paper and pen and number, or create a system for risk assessment that ranks risks from likely to occur to very little chance of occurring. If you’re unsure of the probability of risk, reach out to your fire protection company or insurance company for information on your risk factor. For example, your fire protection company or Authority Having Jurisdiction (AHJ) will have a better understanding of your risk factors when it comes to fire. They should know what, or if, hazardous materials are stored in your building, how many fire extinguishers you have, and what type of fire sprinkler system you have, or should have, to name a few.
Once you feel like you have a solid understanding of your risks and probability of these factors occurring, move on to an action plan.
Create a plan of action
Depending on your most pressing risks, create a way to insure your business better against these risks. If it’s a high fire risk, contact your fire protection company and ask what more you can do to protect your business. If it’s a high risk of power surges due to natural disasters, install surge protectors and contact your insurance company to make sure you have adequate insurance against natural disasters. And if it’s a high human risk, think of ways to support your employees or bulk up your human resources department.
Having a plan in place will help your business bounce back from catastrophic events or instances that could potentially cause serious damage to your business’s building and/or finances. You will likely experience little down time or detrimental effects when you have a plan of action in place.
Once your risks have been identified, prioritized, and assessed, share your plan of action with appropriate parties. For your employees, this means sharing information like evacuation plans, offering specific trainings, and creating supportive resources when needed. Work with your HR department to find effective ways to share information with employees.
For smaller businesses, or any business who doesn’t already have a risk management consultant or risk assessment manager on staff, consider assigning one person a managerial role of risk assessor. The role of this individual may focus solely on risk management of personnel. Some tasks may include:
- Creating and implementing emergency exit plans
- Provide training on new equipment, safety protocols (i.e. fire extinguisher training), or whatever is necessary at the time
- Provide IT support and education to mitigate technology risks associated with human error
- Oversee insurance coverage and policy updates and changes for the business
- Conduct thorough employee background checks
- Maintain office equipment, or have a system in place to ensure maintenance is conducted on a regular basis
Risk assessment help
If you need help identifying risks within your business and generating your small business risk factors, you have a few options. One, you can access free online tools that are available. Two, you could reach out to your insurance company. And three, you can hire a risk management consultant who can not only help you to identify your business risks but also assist in preventing and managing your risks.
Your fire protection company can also be an immensely helpful resource when you’re assessing your fire risk.
Fire Systems, Inc. is a local Atlanta fire suppression company that has been in business for over 30 years. We know all the local and national fire codes and can help you not only assess your risk but also ensure your compliance with these fire codes. We can even help you prepare employees for a workplace fire.
Contact us today at 770-333-7979 or visit our website for more information on all of our services and how we can help you.