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Developing comprehensive and well-thought-out risk assessments is necessary to lay the foundations of a business that will stand the test of time. However, often, accounting for, and addressing, all possible risks and threats isn’t easy. You may have included common pitfalls, such as employee or customer injury, fire, or data loss. But there are more aspects to keep in mind to design a risk assessment plan that will effectively protect your business. In this guide, we’ll look at a few threats that are often overlooked.
Cash Flow Crisis
A cash-flow crisis is a serious risk that could destabilize your business. And yet, many businesses are not fully prepared to ride out the storm. A cash-flow crisis occurs when a business lacks sufficient incoming funds to cover expenses. However, this risk and creep up unnoticed! It may arise from late customer payments, unexpected costs, or poor financial planning.
Left unaddressed, it can disrupt operations, affect your creditworthiness in the eyes of a lender, and lead to problems like bankruptcy. To prevent this, work with a specialized accountant, audit your finances regularly, and include contributing factors into your risk assessment. A few include delayed payments, possible economic downturns, and increasing overhead costs. Solutions vary depending on your specific business need, but may include cash flow forecasting, maintaining cash reserves, and establishing emergency funds.
Loss Of Key Personnel
Losing key personnel—or employees who possess crucial skills or knowledge of your business—can have a severe impact on productivity, reputation, and on your strategy as a whole. For instance, imagine running a family business and relying on an employee who has been with the business for decades, building relationships with customers and covering high-responsibility tasks. If that employee leaves, your entire business needs to be reorganized!
This risk can arise from high turnover rates, poor succession planning, or competitive job markets. Be sure to address it in your risk assessments by planning in advance and making the most to value your key personnel.
Third-Party Risks
Did you know that, in 2024, 35.5% of breaches and 41.4% of ransomware attacks involved third-party players? These may be vendors, service providers, or industry partners. Be sure to better understand who you can trust, and not just which provider is cheaper, to ensure business continuity and profitability!
Supply Chain Disruptions
Supply chain disruptions may come from a wide range of causes. These include unexpected global events, changes in the economic and political environment, natural disasters, or simply problems with transportation. Disruptions in your supply chain can affect anything from your profitability to your business’s reputation. So, it is crucial to include this threat in your risk assessment. Ways to address this issue may include:
- Getting goods and services from a range of providers from different countries. Don’t put all your eggs in one basket!
- Always have a plan B to implement should a supplier become unreliable or suffer disruptions.
- Manage communication with your customers to prevent reputational damage.
- Manage your inventory and stock to ensure you can ride out short-term shortages and delays.
Accounting for these risks in your risk assessment plan can play a major role in your business’s longevity and success!
