Secure eBusiness Solutions

Friday, 19 July 2013

What's waiting around the corner for your online business - Assessing Risk

Analyse risks to future proof your business with eCorner

As a business owner, or operator, every night that you go to bed you are not really sure what might be around the corner waiting for you in the morning. Operating any business has its risks and rewards. Most of us eagerly wait for the rewards but rarely do we manage the potential risks.

So in order to future proof your business and to sleep better at night you need to do some risk assessment and have a remediation plan ready if needed.

Why do online businesses fail?

  • Started for the wrong reason
  • Poor management
  • Insufficient capital
  • Wrong geographic or demographic targets
  • Poor or no plan or strategy
  • Over commit or over expansion
  • Poor use of channels
  • Lack of controlled execution
  • Failure in technology
  • Market changes negate business model
Strength Weakness Opportunity Threats analysis eCorner Blog
Some of these issues you can control but some you may not be able to control but, the key is to be prepared. So how do you go about doing a risk assessment for your company and identifying threats. Unidentified threats can cause a business to fail. You can always round table with your team a S.W.O.T or Strength Weakness Opportunities and Threats analysis. In undertaking that analysis you can identify potential risks and a way to mitigate the risk. The SWOT analysis can do a great deal more for your business and should be a method you use to get feed back.

The first step is to undertake a risk assessment and document as many of the potential risks to your business as you can think of and also share these with your team. 

You need to consider:
  • The risk - what is the risk and can it be avoided
  • Severity/priority - how might it effect the business
  • Action to be taken - what action can we take to mitigate the risk
  • How often to review - how often do we need to review this
  • Who is responsible - which person or organisation will be responsible

Some example risks to your business

Risk analysis eCorner bolgA key supplier cancels or disappears.

Core technology (e.g. website) fails.

You lose key staff.

Your office and equipment is destroyed.

Your stock or warehouse is destroyed.

A major customer sues you.

For each risk that you can identify you need to determine how you can handle that risk and there are four paths to take.

Accept the risk:

You have a potential risk that may occur but you can handle it is a part of the normal business processes.

Avoid the risk:

Put in place some action or process that means that this is no longer a potential risk to the business. This might be done by building in safe-guards or having alternative or replacement capabilities available.

Reduce the risk:

You see a risk but it can to mitigated so as not to cause catastrophic business failure or loss of revenues.

Transfer the risk:

This might be a risk that can be passed on to a service provider or to some other supplier to your business.

Risk Management Plan

Risk review and analysis eCorner
For each risk that you identify you can work through a risk management plan. It may be that for some of the risks that you find you do not have a control method in place. So you need to implement a way to mitigate that specific risk or to establish a recovery process in the event of failure.

As an example you might identify that there is high risk in large projects failing that would leave you exposed to litigation and you have no professional or product indemnity. To mitigate that risk you need to get professional or product indemnity insurance to cover the potential risk. Then you need to monitor that annually to ensure you have adequate coverage.

Business Risk Summary

In summary every business has some potential risks that need to be understood to avoid a catastrophic failure. There may be many risks in the business that will cause little concern and just be a troublesome management problem to solve. But whether catastrophic or minor it is better to know what the risks are and have a plan in the eventuality that one strikes when least expected.

By undertaking a SWOT analysis and then identifying the risks with your team then you will be in a better position to succeed and to grow. 


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Salk Jons said...

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