Curveballs are normal in business. While your business might be functioning optimally today, it could easily stop in its tracks tomorrow. Formidable business leaders and competitors have learned to co-exist with business risks and uncertainties. For your business to thrive, you need to understand how to thrive in the face of threats. You need to use risk management in your startup.
Truth be told, risks will always be present, and the more control you have over how your business reacts to them, the easier it will be to future-proof it. Furthermore, customers are typically loyal to businesses they expect to be around for a long time while upholding a high level of professionalism. If you want to keep these threats at bay, embracing risk management techniques will be essential. The trick is to understand the kind of threats you face and how to counter them.
Here is how you can grow your startup through risk management:
Create a Strong Risks Management Process
Risk management isn’t a one-time process. It requires constant assessment of your business and its risk landscape as well as setting up essential risk control measures. There are multiple risks that your startup might face. The first step to holistic risk management is to list down these risks.
Next, you will need to assess and quantify them. Risks can be quantified by their likelihood of happening and the impact they can have on your business. Quantifying risks makes it easy to rank them and understand how to use your scarce resources to control them. Once you rank risks, the next step is to choose the ideal risk treatment option.
You can ignore, mitigate, transfer, or avoid a risk- the ideal choice depends on your risk tolerance levels. Even after choosing your risk treatment option, you still need to constantly assess the control measure you set up to ensure that they are still holding up.
Related: Everything You Need to Know About Financial Risk
Take Cybersecurity Seriously
Data breaches can happen to any company, whether it is a startup or a large enterprise. While larger companies can easily emerge from cyber-attacks, most small companies barely survive them. In fact, 60% of small businesses close shop six months after a cyber-attack.
Ideally, being proactive enough to set up strong cybersecurity controls could help your risk management and keep this threat at bay. You need to understand the kind of threats you face, both current and emerging. You should:
- Train employees on security best practices
- Constantly update corporate systems and networks
- Get serious with access control
- Assess a potential vendor’s security status before working with them
- Invest in state-of-the-art cybersecurity tools
- Comply with common cybersecurity regulations
- Invest in Apiiro’s Code Risk Platform
An attack could easily impair your business, not to mention lead to a decline in customer trust. Worst of all, cyber-attacks could see you pay a lot of cash in fines and compensation.
Watch Out For Financial Risks
Startups typically need to thrive with scarce resources, which makes financial risks potentially damaging to them. You might be faced with risks like high tax demands, fluctuating exchange rates, changes in stock prices, and cash flow problems. The more you understand your financial situation, the easier it will be to navigate in this risky environment.
Ideally, you should hire an in-house financial advisor to help you handle your finances. If you find having an in-house financial expert expensive, you always outsource the role. Lastly, keep extensive financial records of all transactions and tax demands to ensure that you are in control of your financial situation.
Manage Your Reputation
Your brand’s reputation is one of the most invaluable resources your business has. If your brand’s image isn’t pleasing, you might lose customers, business partners, and investors. You can always easily recover from a financial issue, but recovering from a bad representation can be an uphill task.
When keeping your brand’s image appealing, it trickles down to your professionalism, code of ethics, and the safety measures you have in place. In case something hurts your image, you can always rely on reputational risk management practices to set the record straight. Keeping tabs on what people are saying about your brand online and offline could also help you react to risks quickly.
Get Serious With Your Legal Obligations
Government entities have been making rules and regulations with the aim of protecting the consumer, employees, and competitors. Some of these rules include anti-competitive laws, consumer protection, health and safety regulations, and compensation laws.
If your business finds itself on the wrong side of the law, you could get your reputation ruined, not to mention have to pay hefty fines. Breaking some laws might be so hectic that you can lose your business license. Be sure to have an in-house legal team to assess all legal decisions. Alternatively, you can outsource the task to reputable law firms.
Even if you choose to ignore your business risks, the risks will always be there. What’s worse is that the risks you fail to give attention to might affect you in the future. The more control you exercise over your risk landscape, the easier it will be to future-proof your business.
