In theory, the world of business should be organized and free from various risks and uncertainties. In reality, however, the economy is as unpredictable as real life with a variety of threats waiting to strike companies down. The coronavirus pandemic is a perfect example of such a risk.
And while COVID-19 was tough to predict (the economists call it the “Black Swan”), there are other, more common risks. The biggest one is cyber attacks. Hackers steal billions of dollars every year, and their favorite targets are small businesses.
To survive in this world of uncertainties and threats, every company must know how to manage its operational risk. There are many ways to deal with it, and this article will shed some light on the most important examples of them. Here is the information on how businesses can manage operational risks.
Creating an Efficient Continuity Plan
Implementing an efficient business continuity plan (BCP) should be the foundation of your operational risk management. But what exactly is a BCP? It’s a system of prevention and recovery from any potential threats to your company, both internal and external.
As every plan, you create it in advance and involve as many people as possible, not only the management. Doing that will assure you that your company can deal with it faster, better, and more effectively when an incident occurs.
And what are the examples of things that you should involve in your continuity plan? Here’s a few of them:
- Seeking help from a reliable business continuity software provider
- Investing in a secure firewall
- Using social media
- Performing regular backups
To make your BCP even more effective, it’s a good idea to create various scenarios for each type of risk. That can ensure you’re more versatile in your actions and allow you to adapt to certain situations faster.
An efficient continuity plan can save your money, data, and, most importantly, your reputation.
Performing Regular Backups
Today’s business is all about one thing – data. They’re the core of every company and the most popular target of any hacker. But cyberattacks are not the only way on how you can lose your data.
Typical examples are internal system malfunction, accidental data removal, mechanical damages to the hard drive, viruses, or power failures.
With so many risks, regular backups are a must. But how often should you perform them? It depends. If you want to be absolutely safe, you should do it daily. Every other day should do just fine, though.
Another question regarding backups is where to store your data. When it comes to that, you have a plentitude of options ahead of you. You can use external hard drives, backup software, or cloud storage. The best idea is to divide your data into smaller pieces and store them in different places.
Performing regular backups should be your top priority when it comes to operational and financial risk management. It’s one of the best ways to ensure your data stays safe, and that you’ll be able to run your company without any significant interruptions.
Getting a Legitimate Insurance
What is the first thing you should do after you start your company? Getting reliable insurance. It’s one of the oldest yet most efficient ways to ensure your company stays safe from potential risks and negative aftermaths.
Business insurance provides you and your clients with protection if anything bad occurs, both when it comes to financial and operational risk. What’s more, insurance is often required to perform certain business activities, so having one is a must.
There are various types of insurances. You can get:
- Property insurance
- Professional liability insurance
- Workers’ compensation insurance
- Product liability insurance
- Vehicle insurance
- Business interruption insurance
As mentioned before, getting them is vital to your risk management. How to find a reliable one, though? The best idea is to do thorough research. You shouldn’t accept the first offer you see on the table. Search online for the best option, and ask people in your industry. Then compare the offers and pick the most legitimate one.
Insurance is your first line of defense against potential threats and should be the core of your operational risk management.
The Bottom Line
Managing operational risk is every businessman’s bread and butter. Still, many companies fail to do that efficiently. If you want to ensure your business runs smoothly and without any significant interruptions, implementing the three things given in the article is crucial.
There are also other ways to improve your operational risk management, though. In addition to a continuity plan, regular backups, and your insurance, you can get a reliable firewall, try using a VPN, or organize routine personal training.
Implementing these processes will decrease any potential risk from happening and ensure that your company overcomes the aftermath of both internal and external incidents much more efficiently.