Risk Assessments can be performed at any stage of a business life-cycle. In particular, we have noticed the following events as triggers for when businesses decide to perform Risk Assessments:
- Starting up a business
- Investing in a business
- Planning for growth
- Buying or selling a business
- When something bad and potentially expensive happens to the business and the owners want to ensure it doesn’t happen again
The last one in particular is interesting. A good example is the recent shut down of European airspaces due to the Icelandic volcano eruption and how it affected business or all types, not just the airline industry. Many business want to avoid a repeat of this and have sought appropriate insurance as a way to minimise future risk.
“Why would someone want a Risk Assessment done for their business?”. This is a question that was asked of me a few weeks ago by a client. It made me realise that most people don’t usually give any thought to what potential risks they or their businesses could be exposed to.
I had a think about the pros and cons of performing a Risk Assessment and having a Risk Management Plan for any business and listed my thoughts below:
- Provides a snapshot of the business with regards to current or future risks and issues
- Identify areas where the business can be protected from different types of risks
- Provides a basis for implementing the most relevant and cost-effective safeguards and to avoid costly and long-winded resolution of issues
- Identify opportunity risks so that the business is ready for or working towards potential opportunities that may arise as a result of certain situations
- Increase the likelihood of achieving business or project objectives
- Provides customers and stakeholders an improved confidence and trust in the business
- Costs time and/or money to perform a risk assessment
- Costs time and/or money to implement recommendations
- Monitoring risks can be time consuming
- Not all risks could be identified upfront as these change depending on a variety of circumstances
- Not all risks will eventuate
It is important to note that Risk Management is an ongoing activity and doesn’t stop after an assessment is completed.