Keeping up to date on legal matters is usually the last thing on the to do list of most small business owners; unless of course we need a lawyer fast. Last week I was invited to a Business Briefing by a friend and business attorney. He gave a brief overview of risk management. That sounded too corporate for the small business owners in the room, so we asked how risk management affects us?
Generally, Risk Management is the process of measuring, or assessing risk and then developing strategies to manage the risk. In general, the overview covered several areas of business that business owners need to stay on top of.
Basically , we need to look at the structure of the business, which in some cases will dictate what kind and amount of insurance is needed to protect us and the business. The highest awards given by the courts is in the area of employee liability cases. So keeping good personnel records can help avoid risk in the employment areas.
What risks do you take in your business practices? Your proprietary information should be protected with confidentiality agreements. Do you keep records on self renewing contracts? There was mention that some companies prohibit cell phones with cameras, so as to avoid theft of information.
One of the areas I have heard many horror stories about is the financial. Business owners have abdicated the bill paying, collections, check writing and even credit card use to one person, only to find out that thousands of dollars turn up missing. Create some checks and balances, even if you are doing it yourself, it is essential.
Another area we don’t often relate risk management to is marketing. Registering your business name, having copyrights designated or getting permission to use copyrighted material are all areas of marketing that put us at risk.
Here is a process for reviewing your risk:
- Identify potential areas (Business Structure, Employment, Business Practices, Financial, Marketing).
- Analyse the source of the risk or the cause of the potential problem.
- Evaluate what steps can be taken, ( there may be a way to transfer the risk, avoid it all together, reduce the amount or simply accept the risk)
In any case consult the appropriate people, an attorney, your insurance person, your advisors – remember your business is too important to leave to chance.
The Challenge: Take step one and identify a potential area of your business that might be at risk.