Thomas M. Bragg on Business Risk Management

Let’s drill down a bit into risk evaluation – step 2 in the risk management process. It’s standard practice to evaluate a risk or opportunity’s impact and rank it. You can rank the impact on a scale of 1 to 5, with 5 being the highest impact. Or you can rank the impact “high”, “medium”, or “low”. Or if you’re utilizing financial models you can calculate the risk’s impact and represent it in terms of your local currency.

.

Seems very straight forward, right? It is, but let’s take a step back and ask “Impact on what?” Read the rest of this entry »

It’s been difficult to come up with topics this week.  The situation in Haiti seems to consume the majority of my thoughts when I’m outside the office. Make a difference. Please donate cash to the relief agency of your choice.

.

I thought I’d take a look at my Google Analytics page and see what people are searching for when they find my website. There is a definite trend. Many of the searches involve the word “example” or are geared toward identifying potential risks for businesses. Let’s talk about that… Read the rest of this entry »

Over the last couple of months, I’ve walked through the process for small business risk management with you. I thought it would be a good idea to capture all of the “how to” posts in one place.

.

Take a look at the compilation. My hope is that after reading all the posts below you have a general understanding of how to manage risks and opportunities for your small business. More importantly, I hope you see the benefit of incorporating formalized risk management into your daily business life.

Read the rest of this entry »

It’s been a while… Let’s get back to basics of the risk management process.

.

We’ve covered the first two steps – identifying risks and evaluating them. You now have a great list of your risks and opportunities, in order of their potential impact on your business, but your work isn’t done yet. Having the list helps you anticipate which risk may have the biggest impact on your business, but if the risk becomes reality you will still be reacting to it during a potentially stressful situation.

 .

Since clear, thoughtful thinking is difficult during a crisis, let’s do some thinking now about what we would do. This exercise is called risk mitigation planning. Believe it or not, this is the fun part of risk management. Read the rest of this entry »

As you recall, the 3 steps of business risk management are:

1. Identify your risks
2. Evaluate your risks
3. Plan for your risks

I’ve written a couple of posts (here and here) about the first step – identifying risks and creating your risk inventory (list of risks and opportunities). I’ve also written about the related topic of identifying your opportunities. It hasn’t been an exhaustive tutorial, but hopefully there has been enough information presented to help you gain a basic understanding of how to get started.

.

Now let’s start talking about evaluating the risks. (Note: Whenever I write “risks” in this post, I am also referring to opportunities. They are evaluated in exactly the same way.) In this post I’m going to describe what results from the risk evaluation exercise. The next post will get into the specific actions involved in the evaluation. Read the rest of this entry »

Most people think that risk management only deals with the potential bad things that could happen to your business. What a huge misconception. A key outcome of risk management is the identification of your opportunities, too. Very few businesses actively manage their opportunities, but those that do stand out above the rest in terms of growth and profitability. If you put just a little bit of effort into it, you can join the ranks of the best managed businesses.

.

As I wrote a while back, businesses make a lot of assumptions. Almost all assumptions are wrong, which means that the actual result may potentially be worse than the assumption (a risk) or may be potentially better than the assumption (an opportunity). Opportunities can be identified and managed in exactly the same way as risks…

. Read the rest of this entry »

Risk management is arguably one of the most under-utilized business tools available to owners and managers today. It involves planning for potentially bad events before they happen. Risk management is a technique for predicting what unplanned events might occur and what the impact of those events might be. It’s also a technique for pre-planning how those events can be avoided or how their impact can be minimized. Almost every business does a limited amount of risk management – usually in the form of insurance – but very few businesses actively manage their risks.

.

So what kind of risks am I talking about? They run the gamut. The insurance I mentioned usually deals with financial risks associated with natural disasters, fire, injury or death, accidents, etc., but there are many, many more risks facing your company.

. Read the rest of this entry »