As a small business owner, you may think that risk management is something only “larger” companies need to worry about. The truth is, potential risks can have an impact on any sized company if not properly managed. Businesses can suffer detrimental effects such as financial loss, regulatory penalties and loss of growth potential. According to a recent study from the Project Management Institute, companies with sound risk management knowledge and implementation are on average 15% more successful.
By implementing proper risk management protocols, not only can the success of your company increase, you can reduce the likelihood of a negative event taking place and decrease the magnitude of the impact should an event occur. When the time comes for your company to consider its risk management plan and procedures, here are five areas to keep in mind:
5 Ways to Prevent Improper Risk Management
1. Consider Loss Control – Loss control is easy to neglect when you are consumed with all of the inner workings of your small business. Be sure to not discount areas such as workers’ compensation insurance policies, safety programs, and insurance claims management, as these are some of the main areas in which small businesses can be weakened when not properly addressed.
2. Educate Yourself on Risk – The most important step you can take to protect your business is to educate yourself on the risks you and your company face. Consider an audit/review to analyze your current policies and plans; educate yourself on the types of insurance coverages you need to have in place; determine which employment laws you must be in compliance with; and research which safety programs and employee practices you should be utilizing. By identifying your potential exposure to risk, you can properly plan for future growth and safeguard your small business from major loss.
3. Be Prepared to Delegate – Many small business owners handle the majority of responsibilities on their own, but when it comes to risk management this can be a dangerous endeavor. With so many tasks already on a business owner’s plate, delegation is key. To implement proper risk management you may want to consider delegating specifics tasks to your HR staff or determining if outsourcing HR duties is a better option. PHRs, also known as Professionals of Human Resources (PHRs), can help with the creation of employee handbooks and policy manuals, I-9 audits, recruitment/employee screening, and payroll plus administrative, accounting and executive support. In addition, by partnering with a PHR, you could pay less than you would if you had to hire in-house, full-time experts for all of these areas. Lastly, by delegating these duties to someone, you have more free time to concentrate on profit generating tasks.
4. Implement Security and Safety Measures – Improper security and safety measures could lead to loss of revenue, low employee morale, damage to company assets, lawsuits, workers’ compensation claims and more. Consider creating a safety manual and program for your employees using OSHA’s Four-Point Workplace Programguidelines. The four points of concentration include: Management Commitment and Employee Involvement, Worksite Analysis, Hazard Prevention and Control, and Training for Employees, Supervisors and Managers.
5. Engage in Beneficial Collaborations – While delegation is crucial for small business owners to not become overwhelmed, beneficial collaborations are also vital. For example, partner with organizations that teach formal safety education courses that offer concise, detailed training on worksite safety, employee management and employment law. These topics may seem daunting if tackled alone without guidance, yet many courses tend to last between one and four days and break down each topic in an easy-to-understand format. In addition, hiring an Employment Law attorney may be an option for business owners who don’t have appropriate management tools in place. And last, as mentioned above, Professionals in Human Resources (PHRs) can also guide you through the hiring, disciplinary and terminating processes, ensuring your small business is compliant with employment laws in order to protect you from costly lawsuits and more.
By clearly understanding the risks your small business may face such as insurance and compliance requirements, liabilities, employment laws, safety issues and more, you can protect yourself and your company from financial loss, criminal or civil penalties, government intervention, loss of community or industry reputation, and more. While it may seem overwhelming to have to tackle all of these requirements, keep in mind there are professionals and companies to collaborate with that specialize in each of these areas and can help lighten your load.
At UniqueHR, we can assist you with all of your small business safety and risk management needs. Contact us today and let us help you get started.
For more information on risk management, download our free eGuide.
