Understanding Business Risk Management Best Practices

Encountering risks is an inevitable part of running any business. If not properly accounted for, unexpected events can derail everything a business owner has worked so hard to establish, bringing financial consequences that are difficult to manage without help. This is especially true for small or local businesses, which might need more financial resources to overcome a significant setback.

At Greenlight, helping businesses to manage risk is our bread and butter. As business insurance brokers, we connect professionals with the right insurance policies for them because having a comprehensive insurance policy is one of the most important things a company can do to protect itself from the unexpected. However, there are a variety of other business risk management best practices that business owners like you can adopt.

In this blog post, we’re exploring the fundamentals of quality risk management for New Zealand businesses. What is it, why do you need to do it, and what steps can you take right now to properly manage potential risks for your business?

Best practices for business risk management

Without a proactive approach, risks to your business can escalate quickly and cause costly, time-consuming issues. Investing in risk management equips you to navigate these challenges easily, build trust with your clients, and protect your bottom line. Here’s what that can look like.

Identify and assess risks regularly

Regarding risk management, the first step is knowing what you’re dealing with. Adopting risk management strategies without knowing what you’re covering can sink resources into unnecessary needs. This can be true over time as well. As businesses evolve, so do their risks, so it’s important to make it a habit to periodically review your operations and assess what could pose a threat.

Consider if there are new compliance requirements in your industry. Has your team adopted anything new into their workflow that could introduce vulnerabilities? How does your existing cybersecurity square with what’s needed to keep your data safe? Once you’ve identified the present risks to your business, rank what you haven’t yet accounted for by their likelihood and potential impact.

Develop a risk management plan

Once you have clarified those risks, the next step is to figure out how to manage them. Much like an emergency evacuation plan posted on the wall of your premises, your risk management plan provides clear steps for a response in case something goes wrong. This way, you take the ‘unexpected’ and turn it into the ‘expected’, so you’ll never have to act from the back foot.

Your plan should include preventative measures to reduce the chance of the risk occurring in the first place, clear steps for response, and assigned roles so that everyone knows what to do in the event of a crisis. For example, creating a risk management plan for losing backup data would likely involve your key stakeholders, cybersecurity and IT department heads, and possibly your sales force to manage client relationships.

Invest in insurance

Some of the risks you’re accounting for require insurance to manage properly. While you can’t always prevent certain risks from occurring, you can take steps to financially protect your business if they happen, which is the best possible outcome (apart from nothing happening at all). Properly tailored business insurance policies cover anything from property damage and legal liabilities to cybersecurity breaches and employee injuries.

If you’re building an insurance portfolio to suit your business’s unique array of risks, it helps to partner with an insurance broker who knows risk management best practices.

Train your team

Finally, getting your team on board the risk management train makes a massive difference. Taking the time to provide regular training pays off in big ways. Ensure everyone on board is trained to follow safety protocols, recognise phishing attempts or cybersecurity threats, and understand any compliance requirements relevant to their roles. After all, an informed team is your first line of defence against many risks!

Hopefully, we’ve helped you lay the groundwork for risk management in your business, but remember that this isn’t a one-and-done practice. Risk management is an ongoing, continuous cycle of improvement for your business. It’s important to regularly review the strategies you have in place to ensure they remain effective, stay in touch with your insurance brokers to review policy changes and updates and update yourself on industry trends that could impact which risks are most important for you right now.

It’s all about forming the right habits. If you get used to thinking about this as a business owner, the stress will fade, and a confident, well-conceived risk management plan will take its place.

Want a tailored insurance policy based on your unique business risk profile?

At Greenlight Insurance, we work hard to be New Zealand’s best insurance brokers for businesses of all shapes and sizes. Whether you’re a rural independent or an urban startup, contact our team to build an insurance policy that will protect your business when needed.