Think about one thing: when you start your car in the morning, you need to do some initial checks, like making sure tires have the needed air pressure, oil levels are appropriate and you have enough fuel for the trip you planned. Then, you need to be sure that the destination can be reached on time and avoid incidents. As you continue driving, you have to be careful. However, even if you are extremely careful, you never know when the car tire will burst or there is another car that will hit you. This is really similar to risk management in business.
Ryan Grigson highlights the fact that every single business in the entire world, no matter the industry, needs to focus on risk management. This practically involves being ready for situations that could go wrong in the future. In our example with cars, the tire is a risk that you are aware of. You know what to do afterward, even if you do not want to deal with it. Unfortunately, when talking about businesses, most make the assumption that there is no risk that exists. This is always incorrect.
With the car we install airbags in order to be more protected during accidents. In order to deal with car tire problems, we have a spare in the trunk. This is what managing a business should be like. It is impossible to prevent all car accidents and incidents. In the same manner, the business has to be ready for absolutely anything that could happen, even if it will never happen.
Getting back to the main subject at hand, it is really difficult to assess all the risks that could exist. This is completely normal. You have to be sure that everything runs in an appropriate way, which is quite difficult in many cases. For instance, if you have an e-commerce website, you need to deal with costumer data. That data has to be protected at all costs. Many e-commerce website owners believe that it is impossible to hack consumer data from the databases but what happens when this actually happens? You need to have a plan in place and you need to always assess the security of the website. This is especially needed in the event that your business grows.
Risk management can be defined as being the art of analyzing, identifying, controlling and even assessing business risk. Information systems are now being used in all organizations in order to find current vulnerabilities, fix them and then identify future vulnerabilities. Unfortunately, in many businesses we do not see any form of risk management.
The bottom line is you need to be sure that you understand as many risks as possible when you run a business. Never make the mistake of thinking that there are no risks present. This is just false and a clear-cut way to destroy the entire business. Even a small risk that was not identified could lead to a huge crisis. Unfortunately, numerous businesses end up bankrupt because of such small mistakes.
