Does your business pass the risk test?

At Finnies we can provide businesses with help and advice. The following checklist will help you determine your exposure to business risk...

Most seasoned business leaders will testify to the wisdom of Harold Macmillan, who when asked what he feared the most famously replied 'Events, dear boy, events!'

How often do we hear of an unexpected turn of events derailing a business plan or damaging a company's profitability?

Do you know what potential risks threaten your business? Have you taken adequate precautions to protect your business against the 'unexpected'?

Take the risk test below to find out. Each 'No' answer indicates a potential risk for which you are unprepared:

	YES	NO
Do you monitor the activities of your competitors?
Are you geared up to respond swiftly to new initiatives taken by your competitors?
Do you actively solicit customer/client feedback?
Do you respond positively and swiftly to negative feedback from customers/clients?
Do you have the organisational versatility to respond to sudden changes in the marketplace?
Could your management team handle accelerated growth if circumstances called for it?
Do you have adequate redundancy for key operations?
Do you have offsite back up for key data?
Do you have a management continuity plan in the event of the loss of a key player?
Do you have a timely financial reporting system that keeps you informed of current developments and trends?
Do you monitor financial reports regularly?
Have you ensured sufficient funding for future growth?
Do you deal with problems as soon as they occur?
Do you have adequate insurance cover?
Do have adequate patent, copyright, trademark, or other protection?

These are just a few examples of the kinds of risk that might threaten a business. If you answered no to 2 or more of these questions, your business could be at risk.

The truth is, of course, that risks should not be unexpected. Although none of us can tell the future, we can all anticipate potential risks and take appropriate precautions.

In our experience, there are four common scenarios in which businesses unnecessarily expose themselves to risks:

Inadequate planning - especially where insufficient attention is given to future funding requirements, staffing needs, etc
False economy - where short-term savings in time or expenditure leave the business exposed in the longer term
Rapid growth - where the sheer pace of growth obscures danger signals until it is too late
Long-term success - where complacency gives rise to the assumption that the factors that have led to success in the past will continue to do so in the future

To avoid these, we recommend all our clients come in for a regular risk assessment and advice on the most appropriate risk management policies to implement.

If you would like professional assistance from experienced accountants and business advisers, contact Finnies.

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Does your business pass the risk test?