Risks are present in anything you do, whether waking up in the morning, taking a flight, trying new foods, or simply existing. But, when you run a business, there is a barrage of risks that are ever present you need to be aware of protecting your company against. The risks can be wide and varied and come at you from a multitude of angles. One specific angle you can be presented with risk is operational risks.
Operational risks, potential disruptions that can occur during a business’s day-to-day operations and activities, can significantly impact how you run your company. These risks, primarily caused by internal factors, are not entirely out of your control. Understanding and managing these risks is essential for the smooth operation of your business.
Let’s delve into some specific operational risks you need to be aware of and protect against. These could include fire, theft, vandalism, employee errors, and weather-related disruptions. Understanding these risks and implementing appropriate risk management strategies can help mitigate their impact on your business.
Table of Contents
Fire, Theft and Vandalism
All of these threats can occur from both internal processes and external elements. Your risk of fire increases significantly if you are not on top of safety in the workplace and following best practices. Whether it is a result of machinery breakdown, human error, or the building being set ablaze due to arson, fire can be a massive risk that requires risk management in place. The same applies to theft and vandalism, which can directly result from third parties attempting to cause damage and harm to the business, i.e., shoplifters or employees with malicious intent.
Labor
This involves the employees you have and any partners you collaborate with making mistakes. Whether it is a vendor getting something wrong with a contract and neglecting the other side of the contract or having employees making silly mistakes due to insufficient training or disregard for the rules, there are multiple ways you can fall victim to operational risks vis the human element of the business. You can reduce or limit mistakes by automating as much as you can standardize operations, or you can utilize software such as contract management software that enables you to streamline the contract process, ensure all details are included, and each contract is easily created, executed, and stored for improved tracking and audit trails.
Weather
You can’t control the weather, but you can control how you prepare for and protect the business against it. Hurricanes, flooding, tornados, and extreme heat can all impact your ability to be operational at any given time, especially if you’re in an area that experiences frequent extreme weather changes. You need weather mitigation plans because you cannot predict the weather precisely all the time, and nature is known for throwing curve balls.
Consider things like hurricane plans, i.e., can people work from a different, safe location, or will you shut down once the danger reaches a certain threshold? Have supplies to protect against floating or build flood barriers into the building, for example? Can you have sun protection equipment for times when you need to operate outdoors in extreme heat? most importantly, you need to anticipate the impact weather can have on vendors and your supply chain because this, too, can directly impact your ability to remain operational at full capacity.
Technology
Technology risks include but are not limited to cyber-attacks, inefficient software, system failures, equipment failures, and more. All of these risks can impact what you do and how you do it, not to mention exposing customer and business information to criminals if they gain access to your business data. You need stringent cyber security measures in place, and you need to be proactive about protecting against possible threats and attacks.
You should be ensuring that your technology is regularly updated and upgraded where possible to avoid issues due to using equipment that isn’t fit for purpose. You need to introduce new technology or software carefully to integrate it with your legacy software for a seamless transition and minimal disruption across the board. Even the slightest mistake or incompatibility can grind the business to a halt and massively impact your profitability and reputation.
Of course, there are many other risks facing businesses, but operational risks that are not properly managed and controlled can be especially disastrous due to how you operate. If you can’t operate at full capacity by having contingency plans in place for those items, it’s not impossible to keep going, but then it’s likely the situation will be too much work in the short and long term.
