You could define it as the possibility of suffering harm or loss. In the business context, we all suffer financial risk – a loss of assets, drop in sales leading to finance issues, people who don’t pay, or computer viruses, to name a few.
Risk management is about:
  • Identifying risks, and not only business risks
  • Putting those risks into categories for ease of monitoring
  • Identifying who in your business (it’s probably you) has ultimate responsibility for risk management
  • Involving others (key staff) in risk identification and management
  • Considering public interest obligations (e.g. notifying those near to a “job” of a lot of noise during certain periods).
So you know all this – now what?
You need to develop an action plan to treat risk and then apply that plan to your business. With over 30 years of involvement with business, I’ve seen many disasters which could have been avoided. Sudden death on the job, fire, theft (by staff and outsiders) domino effect failures (a major customer falls and so do you), storms, market collapse etc. Here are some things you can do:
  • Carry life and income protection insurances
  • Carry business insurances
  • Ensure all paperwork is high standard – i.e. contracts, tenders, invoices, staff contracts, leases etc. Don’t skimp on paperwork – use experts to get it right.
  • Make certain all staff are adequately trained, particularly re safety rules.
  • Make sure your computer systems are built (and protected) like Fort Knox. This area deserves serious attention.
  • Keep up to date with law – pay rates, super, health and safety and many others
  • Get on top of any problem early – have regular staff meetings, if applicable.

And never forget you can’t be an expert in everything – don’t even try to be – use experts.

And keep reviewing your plans – everything changes.

And don’t end up like Bart in the story below:
Fair Work Australia had received a complaint that Bart wasn’t paying proper wages to his staff so they sent an inspector out to investigate him.
In a demanding tone, the inspector said, “I need a list of your employees and how much you pay them.” Bart replied, “Well, there are two hired hands I pay $250 a week plus free room and board. Then there’s the mentally challenged guy. He works about 18 hours every day and does about 90% of all the work around here. He makes about $10 per week and pays his own room and board.
I do buy him a bottle of bourbon every Saturday night so he can cope with life, and he gets to sleep with my wife occasionally. Sensing an opportunity to assess a big fine, the inspector said, “That’s the guy I want to talk to … The mentally challenged one.”
Bart answered, “That would be me.”

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