Running a business involves risk, and owners accept certain levels of risk because of the potential for success. Capital risk can be the result of various factors but is often a combination of internal and external components. However, there are tools that can help business owners protect their companies from threats.
One of the most preventative measures a company can take is in the form of planning. A well-structured business risk mitigation plan not only reduces the exposure to risk, but also decreases the effect and severity of risks, should they occur. These types of plans also develop processes for recovery in case of an accident, natural disaster, or outside threat. Ultimately, a solid plan will identify possible risk scenarios, assess the damage those risks can do, and design how the plan can be implemented.
There are several examples of plans a business owner can implement to ensure continuing profitability. What separates businesses that are resilient from those that are not can be determined by its ability to respond swiftly to major events that might endanger it and its owner.
There are four primary examples of mitigation planning: computer security, natural disaster, business succession, and environmental.
Computer Security Risk Mitigation Plan
The need for heightened computer security has never been more necessary than today. Everyone from hackers to corporate spies exploit networks with security vulnerabilities that can lead to breaches in private account information, intellectual property, product development data, and so on. A computer security risk mitigation plan includes methods that strengthen passwords, patch “back doors” in sensitive networks, and encrypt sensitive data during transmissions.
Natural Disaster Risk Mitigation Plan
Natural disasters, such as Hurricane Katrina, can have a devastating effect on small businesses. Not only can they cause billions of dollars in damages in infrastructure but they can create massive losses in communications and customer data. Because of this, making an effective recovery is almost impossible, particularly if a business does not have a reliable back-up site. A natural disaster risk mitigation plan helps small business owners get prepared for such events.
Business Succession Risk Mitigation Plan
Some threats come from internal sources. Breaches in data security are the most obvious, but there are less sensational risks such as a change in leadership. A small firm may not survive the loss of vision and unity when a company leader passes away, retires, or leaves. A succession plan can reduce the risk of uncertainty that comes from a change of leadership so that vendors, customers, and employees will feel secure that the business will continue.
Environmental Risk Mitigation Plan
Some businesses carry large environmental risks such as dangerous solvents, petroleum waste products, oil-based inks, and other toxic substances. An environmental risk mitigation plan can help companies reduce their potential to contaminate local soil and groundwater, outline methods to be more environmentally friendly, and create emergency plans for environmental disasters should they occur.
Protect Your Assets
Protecting business assets today is more than fiscal security. Not only should risk mitigation plans for business include procedures that address internal risks but also disaster-recovery programs. Data security, environmental protection and recovery, and succession plans for a transition in leadership are just a few of the risks that businesses can defend against. JMV Law can help California businesses plan for the future, while safeguarding today.