Risk management is the art of improving the quality of people and organisations. The foundation for this must always be an inventory of the risks that could jeopardise the continuity of your business. Using this inventory enables you to make choices between various measures.
Generally, there are five different solutions for dealing with risks:
The first three options have more to do with changing work methodology, prevention, amending the terms and conditions of supply and transferring the risk of bad debtors. Insuring a risk, the fourth option, is primarily intended to protect the balance between profit and loss. Overinsuring a risk – or purchasing the wrong insurance for a risk – may cost you as much as running an irresponsible risk. Maintaining a tax reserve yourself, self-management, is an underappreciated method for financing risky situations. Understanding risk, loss, income and corporation tax, as well as insurance, can result in profitable solutions.
Emergency plan Your emergency plan will act as a guideline for your company in the event losses are suffered. This plan clearly describes who is responsible for carrying out which duties. You can limit or prevent consequential damage by acting quickly to inform customers and suppliers of your situation. In summary: effective risk-management delivers financial benefits. You can avoid many losses, making risks manageable and cheaper to insure. Ask your specialists to review your situation and see what you can save on your risk management operations.