Business risk originates from many different areas—internal to the business and from external sources. The best ways for a business to manage risk is to evaluate risk factors and make contingency plans on how to deal with the risk when and if it presents itself. Planning for these risks is the main them of managing a business risk, but you cannot plan for everything, so managing risk also has a lot to do with how you react when risks arise.
- Write a business plan. The process of writing and putting together a business plan is a vital step to assessing, evaluating and planning for the risks of running a business from the various standpoints of the business. This includes operations, finance and marketing.
- Determine insurance needs and obtain coverage. Most businesses carry liability insurance or insure the building and contents where the business operates. Depending on the business activities, you need to determine the other types of insurance and obtain the correct coverage for your business. For example, a tile installation business should carry liability insurance in case a worker is injured while installing tile. A real estate business or legal business may obtain an errors and omissions insurance policy in case a client sues for a professional wrongdoing.
- Write a risk management plan. Separate from your business plan, write a risk management plan, which lists all of the possible risks that can affect the business. The plan also lists the steps, procedures and ways in which the business intends on dealing with the risk as it arises. For example, if your business is located in an area of the country prone to hurricanes, then you may have a hurricane preparation plan on how you can minimize the risks associated with this type of weather to your business.
- Train employees. Avoiding risks and how to deal with the risk if it occurs can help the business avoid further damage or exposing itself to risk in the first place. For example, if your business deals with a heavy machine, such as forklifts, you may want to have each employee earn an OSHA certification for operating the machinery as proper operation of the forklifts can avoid injury and damage risks.
- Update plans. Even the best of planning efforts may fall short, so when the business is exposed to a risk, react accordingly and then put a formal plan and procedure in place in case the same risk occurrence happens again.
Source: https://smallbusiness.chron.com/manage-business-risk-4566.html