How to approach inevitable risks in business

As much as we’d like to avoid it, there’s an element of risk in every business operation. Your biggest client could pull out unexpectedly, or your suppliers might increase costs. In my experience, the best way to manage inevitable risk is by having strategies in place that allow you to identify potential challenges and develop a plan of action well ahead of time.

3 approaches for managing inevitable business risk

I believe that the following three approaches to risk management work in any business environment and make a real difference to minimising the impact.

1) Identifying potential risk on a regular basis

Brainstorming risk scenarios – With the whole team present, we share potential problems and design solutions together. We look at lots of possible scenarios, assess how likely they are, their consequences and solutions. Everyone brings a different perspective and knowledge base to these discussions, often surprising each other with their approach. I like surprises, but not when it comes to business. As a result, I’m proactive about staying on top of what’s going on so I can spot potential risk early. Some tactics I’ve used over the years include:

• • Networking outside of the organisation – I make sure I know what’s going on in the local environment and in my industry. By building a professional network, I learn about the struggles others are facing, or problems they’re anticipating and consider how these same issues might affect my team.
  • One-to-one discussions – As well as performance-focused meetings, I like to have regular one-to-ones to find out what my team are dealing with. Understanding their pain points or what’s taking the most time allows me to help them address it.

I’ve worked in a number of companies where these types of conversations didn’t happen. As a result, managers didn’t know which clients were unhappy, or which staff were feeling undervalued. They were never prepared for risk and as a result did not deal with it effectively.

2) Managing with risk in mind

Employees who are adept at managing risk by spotting problems early can rectify issues before they occur. Improving your team’s project management skills is a key part of this process.

Before the project begins, everyone involved should look for potential difficulties and work together to continue this analysis as the project progresses. Good project managers know how to plan effectively and ensure that separate teams are supporting each others timelines. They communicate clearly and effectively to all parties so everyone is briefed and able to hit the ground running.

This level of planning and analysis eradicates many problems encountered on individual projects and allows your colleagues to hone the skills they need to look more broadly at organisational risk.

Good project management skills allow your team to identify risk early.

3) Succession planning to minimise impact

Once you’ve identified potential risk areas, you can create action plans. Here are some examples of situations you should plan for.

• Employee resignation – Depending on your set up, you might have a policy of training two people for every task. You may also ensure you have procedures in place to get a job advert out quickly, increasing the chances of a thorough handover.
• Increased costs – Schedule opportunities for budget forecasting that incorporate increased expenses. By looking at the results you can think about how you could adapt if required.
• Operational difficulties – What happens if your office floods, or the internet is down? Plan so that your business continues to operate no matter where your staff are or what equipment they have on them. For example, I like to use cloud-based software packages so I know my team can access crucial information wherever they work.

To improve your ability to identify and manage risk, take a look at ICML’s project management courses available in Sydney, Melbourne and Brisbane. We specifically include a section on risk management so your team are well-equipped to deal with it.