I’ve likely written about this before, but I can’t stress enough how important it can be to engage in risk management in any size business. Things will go wrong. It’s a given. And while you can’t plan for everything, you can identify the most likely and most critical risks and plan for those.
This was reinforced for me today in my business. We recently signed with a new supplier who is able to get new game titles to us the day they release or earlier–most of the time. This spares us a lot of advance planning and running around shopping sales at our competitors in order to get enough new games in to supply our customers.
But this week was one of the exceptions, and with the most eagerly-awaited game release in over a month. Fortunately, we already have our Plan B in place (our former Plan A was demoted to Plan B), and we were able to get enough games to meet most of the demand. When our shipment arrives from our distributor tomorrow we should be able to handle any remaining demand.
However, there are plenty of other possible situations we have not established a backup plan to handle. For example, should our credit card terminal break, we are out of luck for at least several hours while we contact our vendor and arrange for another machine to be delivered. Similarly, we have no plan in place to cover if our server goes down. We planned to have our data protected, but that’s not the same thing.
For now we’ve had little option in either case. Our cash-tight situation mandates that our risk management response be to “assume the risk”, better known as “we’ll deal with it when it happens.” We can’t afford a duplicate terminal, nor can we afford having a spare server ready to go as quickly as we can transfer the database file. Someday we will be able to–and we’d probably be well-advised to explore some mitigation options in both areas–but for now, we just have to roll with the punches as best we can.
But there are some other possible risks that we perhaps can do something about. For example, while each partner in the business knows the POS system and can ring up sales, until recently there was only one of us able to keep the books. Recognizing that potential problem (our bookkeeper may need to find a different job), we have spent some time training a backup. We also intend to get a list of procedures together as soon as we can to make it easier for someone else to step into that role.
It is always a good exercise to brainstorm all the different things that could go wrong with our business, even if most of them might be deemed either too minor or too improbable to take seriously. The ones that are more likely and/or more detrimental can and should be planned for, even if it’s just accepting the risk for now.
Some people may think that such an exercise is dwelling on the negative. But as someone once said, “Don’t tell me that worrying doesn’t help. Most of the things I worry about never happen!” I humbly submit that you’ll worry about them much less if you already know what you’ll do if they happen.
What are some of the biggest risks in your business? Do you have plans in place to deal with them? Do you see a value in risk management planning, or is it much ado about nothing? Weigh in below in the comments!