9 of the Biggest Risks Your Business Faces

Every business day, we face a plethora of risks. Key people may not show up for work, a client may be another day late with its payment, a fast-moving storm could cut off your electricity, and so on. Every day brings new challenges to our livelihoods, as well as a lot of ongoing and recurring problems.

It is not possible to manage every possible threat, let alone do so effectively. We have to pick and choose our battles. What we can do is figure out which threats could have the most significant negative impact on our organizations if they were to materialize and which are most likely to occur on any given day. That means that for us to adequately manage risks, we have to understand them.

Nik Wallenda over Niagara Falls (June, 2012) – iStockPhoto

The type, severity, likelihood, and combination of risks we face are unique to each of our companies, as is our risk tolerance. Yet, there is much we have in common. Some of the greatest risks we all face at one time or another include:

  1. Inadequate funding. No matter how well planned and organized a venture is – regardless of how noble its vision is or how clear its objectives are – it cannot get started and cannot sustain itself without adequate capital. If “no money in the bank” isn’t the greatest risk we face, it’s awfully close.
  2. Lack of training and lack of education. It’s obvious what a lack of training can mean to a business. If employees aren’t adequately trained, good results rarely (if ever) happen. Moreover, if employees aren’t properly educated, they aren’t prepared for change and uncertainty.
  3. Inflexibility. If the company has a “if it isn’t broken, don’t fix it” mentality, it is sabotaging itself. The world around us is continually changing – what makes us think we don’t have to?
  4. Hiring the wrong people. Many of us think we should hire people who appear to be a “good fit with the organizational culture”. We shy away from those who don’t appear to fit the “ideal employee” template. Do we really want everyone to think and act alike?
  5. Short-term thinking. Clear vision and a coherent strategy should guide a company’s direction and its decision making. Too often, however, companies are content to deal with “the here and now” and don’t consider the long-range repercussions of their actions.
  6. Lack of balance. If we’re always looking at every issue from the same side, not considering that there may be an alternative viewpoint, we miss a lot of business opportunities. In the process, what we hang onto are quickly outmoded methods, ways of thinking, and products.
  7. Tendency to reward the wrong behaviors. We prize conformity, conventional wisdom, team players, and unquestioning loyalty. If anyone in the organization is a nonconformist, a free thinker, or tends to challenge the status quo, we’ll oftentimes see them as a problem and ignore, bury, or do away with them.
  8. Impatience. We are victims of our own unreasonable expectations. If a course of action doesn’t yield a high degree of immediate gratification of our lofty desires, we want to move on. We think in terms of short sprints when business is really a marathon. Whatever happened to “slow and steady wins the race”?
  9. Lack of accountability, especially at the top. If the people at the top of your organization tend to fix blame rather than problems – if the prevailing attitude is “shit rolls downhill, so you’d better do what you can to avoid the avalanche”

Yes, we encounter many risks in the typical business day. Many of them are self-inflicted, as well. So, what’s the biggest risk to the well-being of your organization?

And, how do you manage those risks?

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Posted in Risk Management

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