With severe weather events always in the news, small-business owners can never help wondering whether their companies could survive a disaster and what it would cost to rebuild. To ensure your business can survive every disaster—from an act of God to something man-made, like employee embezzlement—it’s a good idea to have a risk management plan in place. It’ll help you pick up the pieces.
Step 1. Identify the risks. With a partner or trusted employee, assess your business, naming every threat you can possibly think of, such as employee safety, online security, embezzlement and even negative business reviews.
Step 2. Measure the impact of each risk. Would the impact be as small as losing a vendor or as large as having to shut down for good?
Step 3. Decide how to respond. The impact of the risk dictates what your response should be. You might not even need to plan a response if the impact doesn’t warrant one.
Step 4. Monitor the risk. Continue to monitor the risks in your business at least annually—or more often if your circumstances change—say you move to a different location, offer new products or services, or must deal with new government or industry regulations.