The correct management of the risks in your company can avoid big losses. Multinational companies usually have whole teams that are dedicated to assessing and reducing risks to a minimum. A self-employed person and an SME do not have the same resources, but they can still do good risk management, because the popular motto “better safe than dead” is applicable to all, both large and small and entrepreneurs.
So you can show them on a map and manage them more easily:
- Assume: These are the risks whose damages do not occur in a habitual way and do not have a high impact on your business. You can assume them (for example, dropping and breaking a mobile phone).
- Reduce: It is important to reduce the risks that cause the damages with high frequency although they have low impact. Although the impact is not great, its high frequency means a high cost for the business. For example, an old truck that has frequent breakdowns can be fixed over and over again. But in the long run you can lose customers because you do not reach your destination in time. Also the delivery trucks that suffer frequent blows and frictions can be a high cost for the repairs. Plus the cost of your best cheap truck insurance would increase year after year.
- Securing or transferring: Risks that occur with low frequency and high impact are very dangerous (for example, total truck accident, serious work accident, warehouse fire, and loss of goods transported by accident or theft). The most common thing is to keep job security to the maximum and to make insurance cover this type of high risk (truck or van insurance, freight insurance, accidents, transporter liability insurance etc…). If you have the possibility, you can also try to negotiate the transfer of the activity that carries the risk to another company.
- Avoid or eliminate: And, finally, there are the risks that cause damages with high frequency and high impact. It is important to avoid them or eliminate them at all costs. Car insurance companies raise the price of insurance much in these cases or even reject it directly. An example can be the theft of goods highly esteemed by thieves: copper, mobile phones, laptops, tobacco, etc. This occurs on trucks during transportation or in warehouses. If you need to transport any of these goods, it is important to be sure that they are covered in the merchandise insurance or explicitly ask to be included.