Risk management is the procedure companies adopt to identify, evaluate, and control threats to their operations. They can be in the form of natural disasters, uncertainties in the economy, workplace accidents, and legal liabilities. The consequences of these threats can severely disrupt the companies’ activities in the market. As a result, they may end up incurring huge financial losses. Preparing a comprehensive risk management plan allows companies to minimize potential business risks and save money.
Michael Saltzstein – What are common business risks affecting companies of all sizes?
Michael Saltzstein is a financial professional from Alpine, California, who specializes in risk management. He is a pragmatic business leader who provides international risk services and multi-line insurance claims to companies. He even assists his corporate clients in implementing their enterprise initiatives and strategic growth plans. Many of these companies are doing well in the market dues to his vision and business acumen. His other areas of expertise include loss control, occupational safety, coverage evaluation, workers’ compensation, actuarial studies, and corporate negotiations.
He says companies should be aware of the common business risks likely to affect their activities. These generally include:
- Economic risks resulting from uncertain market fluctuations the economy,
- Compliance risks for not following the statutory laws governing their activities,
- Financial risks when companies cannot meet their debt obligations to their lenders,
- Security risks resulting from business frauds and data breaches,
- Reputation risks when their products or services do not satisfy customers,
- Competition risks when new emerging companies threaten their market share, and
- Operational risks due to workplace accidents or serious labor unrest.
What should companies consider to prepare a risk management plan?
When preparing a suitable risk management plan, companies should consider the following aspects:
- Identify potential risks to their supply chain and business operations,
- Assess the impact the business risks can have on the cash flow and profits,
- Find out ways to eliminate, avoid or reduce the impact of business risks,
- Devise and implement a contingency plan to recover from unavoidable business risks,
- Disclose the details of the contingency plan to the top managers and employees, and
- Ensure the employees know what to do when executing the contingency plan.
Benefits of having a suitable risk management plan
The advantages of implementing a suitable risk management plan for companies are as follows:
- Creates a safe working environment for employees, managers, and customers,
- Safeguards their cashflows, business profits, and assets,
- Ensures the stability and continuity of their commercial operations, and
- Saves money by avoiding unnecessary legal and insurance costs.
Michael Saltzstein sums up by saying all companies need to have a suitable risk management plan for their business. Only then can they deal with economic, security, operational, and financial threats to their businesses. When devising this plan, they should identify various risks to their activities and find out ways to deal with them. In the process, the companies will be safeguarding their finances and ensuring the continuity of their operations. They even create a safe working environment for their employees, customers, and top managerial personnel. This helps them to save money on insurance and unnecessary legal costs with success!