This week ClearRisk is proud to provide a guest post by Bert Fens of Forces Risk Management. Bert is a risk professional with 20+ years of international experience in risk management, holding several senior management positions. He is also a member of the Risk Management Consultants of Ontario (RMCO).
Small and Medium-sized Businesses (SMBs) can benefit considerably from a simple but effective risk management program.
Consider this: more than 2 out of 5 small business owners in Canada have experienced a significant disruption to their businesses; 80% of businesses affected by a major incident have to close within 18 months, yet 62% of business owners have placed business continuity planning low on their to-do-list and 18% of them admit that it is not even on their radar. These numbers are a clear and very scary indicator that the odds of survival for companies that have been hit by a major loss are incredibly low.
Let us have a closer look at some of the threats for SMBs. The dependency on key personnel is typical for smaller organizations, as is their reliance on the skills and know-how of its owners. Supply chain risks, such as the dependency on suppliers and critical service providers, or on major customers, are accepted as an inherent part of business. Then there are fires, natural hazards, contractual and legal liabilities, and health & safety regulations to be considered, as well as an environment that needs to be protected. The list of possible threats is endless. An SMB’s reputation as a reliable business partner is very often the main driver for its success. If, for whatever reason, the SMB is unable to supply its customers for a certain period, the effects will therefore hit their business considerably harder as they would do a larger company, with potentially devastating results.
Fortunately, there is good news too. The generally ‘flat’ organizational structure of an SMB allows for a smooth implementation of a risk management program. There is no need for a complex and time-consuming process; a simple risk management framework, tailored to the size and needs of the organization, can be very effective, whereby an equally simple toolset can be applied to maintain the controls that are set in place. When it is finished off with a customized contingency plan, the SMB will benefit from strongly reduced risk exposures, increased emergency response preparedness and a far more efficient use of resources. Now there is clear accountability for risk installed and the company is compliant with relevant legislation. The SMB has evolved from being in reactive mode to a proactive model and it now has the ability to recognize and respond to opportunities for sustainable growth. But most of all, the odds of survival have significantly improved to the level where stakeholders can be given ‘reasonable assurance’ that unforeseen events will not lead to non-achievement of business goals.
You can contact Bert Fens through the FORCES Risk Management website www.forcesriskmanagement.ca