Your business ideas and strategies are going according to plan. Right now, you see smooth waters ahead and are confident you’ll reach your goals. You may not be thinking about all the potential dangers you can’t see. But risk is something that comes with the territory. All businesses, regardless of industry, are vulnerable to threats and losses.
Whether those vulnerabilities come from technology, the balance sheet, or public perception, someone has to manage them. Protecting your company is imperative. You need ways to anticipate and guard against the visible and unseen hazards around you. Here are four measures you can take to defend your business against risk.
1. Use GRC Software Tools
The minute you open your doors, your company faces the risk of regulatory noncompliance. Operational procedures and tech applications also create and expose vulnerabilities.
If an employee slips up, a process lacks explanation, or someone gains unauthorized network access, you could have a problem. And not just a tiny one that the team can correct and mitigate overnight.
Seemingly innocent mistakes or a lack of documentation, training, and preparation might lead to expensive and damaging compliance issues. Violating HIPAA, Sarbanes-Oxley, the California Consumer Privacy Act, and other industry-specific regulations can result in financial consequences and even shutdowns. But gaining visibility into governance, risk, and compliance issues across an organization is challenging, even for small business owners.
Implementing GRC software lets those at the helm automate compliance with industry standards and laws. You can see and monitor potential hiccups and existing issues that increase your company’s regulatory risk.
While many GRC tools help with more general codes and regulations, others include specifics related to data and privacy management. Some can also integrate with IT and cybersecurity vendors, ensuring their procedures remain compliant as well.
2. Have a Crisis Communications Plan
Data breaches, lawsuits, scandals, and poor-performing products and services hurt a company’s reputation. Unforeseen changes in the environment, including pandemics, also influence public perception. While some firms can ride out the waves of bad publicity, others might see their business dry up. To prevent this, companies can design and implement crisis communications.
An evolving crisis communications plan is part of managing reputational risk. Well-crafted messaging and public relations help leaders take ownership of what happened.
Crisis communications explain critical details to the public and what the company is doing to resolve the problem. Targeted emails and press releases often also highlight actions the business is taking to prevent future occurrences. It’s a way of reassuring people and regaining their trust.
That said, crisis communications plans are rarely set in stone. A 2021 PwC survey revealed only 39% of U.S. business leaders felt they had a relevant crisis management plan during COVID-19. About 20% of respondents said they had to create new plans, and 80% said secondary crises were exacerbated by COVID-19. These responses underscore the importance of having a flexible crisis communications plan that dedicated teams know how to carry out.
3. Take Out Liability Insurance
Government fines related to cybersecurity incidents can run into the millions. During the last few years, top banks were slapped with regulatory penalties between $75 million and $125 million. Many of these fines came from poor and insufficient security practices that led to data breaches.
However, data theft and malicious network activity aren’t the only risks that can result in severe financial losses. Someone might slip and fall in your store or your shopping center’s parking lot. They can end up suing your company for their medical bills and emotional distress. An employee could also embezzle money from the business for months or years before they’re caught.
Securing business liability insurance is a way to protect your company against potential financial loss. Liability insurance can shield business and personal assets, depending on your company’s structure.
Different policies cover various areas and financial assets, so you may need more than one type of liability coverage. Some might help cover property damages and replace physical assets like vehicles and equipment. Others could cover losses related to cybersecurity.
4. Prioritize Risk Management
Your business could form an internal team or hire an external vendor to handle risk management. A critical part of the group’s job is to assess what threats your company faces. The assessment process usually includes an audit of in-house and outside forces.
You might have insufficient or misaligned resources to handle risks that are likely to happen. Some of your business’s vulnerabilities could come from industry-specific circumstances. For instance, retailers face the threat of loss from stolen merchandise and ID theft. Hospitals and doctors are up against the risks of malpractice lawsuits, insurance-related losses, and breaches of patient data. And streaming and online-based services have to mitigate ISP outages and server failures.
Dedicated risk management teams don’t stop at identifying risks specific to your business. They design response and prevention plans for potential crises of all kinds. These strategies and procedures help you spring into action more quickly if and when those threats materialize. With a designated risk management team, you won’t have to pull resources from other crucial areas.
Conclusion
Every organization has to deal with and plan for risk. Even if things seem to be working out now, threats could be building up beneath the surface. And the circumstances your business deals with today can change rapidly without much warning. Businesses that create and implement buffers against probable risks stand higher chances of recovery and survival.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.