As highlighted by the recent pandemic, running a business comes with the constant possibility of unexpected events that can significantly disrupt operations.
The difficulties many businesses faced as a result of COVID were a good reminder of the importance of identifying, understanding and mitigating risk. And while you can’t be prepared for everything, you do need to spend time identifying what could go wrong and creating a plan to overcome it.
One easy way to do this is with a business risk register. Here are some commonly asked questions about this tool and the best way to use it.
A business risk register, sometimes called a risk log, is a document that is used to identify potential risks facing a project or business.
The risks you list on your register might include:
Using a risk register to document potential risks will give you a ‘source of truth’ to refer to and share across the business.
This is an invaluable tool for taking stock of risk, highlighting how likely something is to happen, the impact severity if it did happen, and also documenting how risk will be mitigated.
For example, product theft may be a major risk for your business. Your risk register can highlight this and mention the steps that are in place, or required, to prevent it, e.g. Security guards, cameras etc. The risk of a competitor launching a similar product may be less of a concern because you have a patent, in which case that would be a lower risk.
Risk registers are versatile and can be created for the entire business, departments or special projects.
Here are some of the areas to apply a risk register:
There are many different ways that you can create a risk register and the strategy you use will depend on you and your team.
However, your risk register should do the following:
Want to get started? You can download a risk register template here, or you can contact your accounting team and arrange a meeting to go over your business risk register.
Need guidance to minimise risk in your business? Get in touch with AFS & Associates today.