Treat risks to your business
Reducing risks involves working through options to deal with unacceptable risks to your business. Unacceptable risks range in severity — some risks will require immediate treatment while others can be monitored and treated later.
Your risk analysis and evaluation will help you prioritise the risks that need to be treated. When you are developing a plan for treating the risks, consider the:
- method of risk reduction
- people responsible
- costs involved
- benefits of reducing risks
- likelihood of success
- ways to measure the success of treatments.
How and why you have chosen to manage your risks should be outlined in your risk management plan. It's important to review your plan regularly to take into account any new risks associated with changes in your business or improvements in techniques for treating risks. The following are different options for treating risks.
Avoid the risk
If it's possible, you may decide not to proceed with an activity that is likely to generate risk. Alternatively, you may think of another way to reach the same outcome that doesn't involve the same risks. This could involve changing your processes, equipment or materials.
Reduce the risk
You can reduce a risk by:
- reducing the likelihood of the risk happening — for example, through quality control processes, auditing, compliance with legislation, staff training, regular maintenance or a change in procedures
- reducing the impact if the risk occurs — for example, through emergency procedures, off-site data backup, minimising exposure to sources of risk, or using public relations.
Transfer the risk
You may be able to shift some or all of the responsibility for the risk to another party through insurance, outsourcing, joint ventures or partnerships. You may also be able to transfer risk by:
- cross-training staff so that more than one person knows how to do a certain task and you don't risk losing essential skills or knowledge if something happens to one of your staff members
- identifying alternative suppliers in case your usual supplier is unable to deliver
- keeping old equipment (after it is replaced) and practising doing things manually in case your computer networks or other equipment can't be used.
Make sure you have adequate insurance
Speak to your insurer to find out if you have the right insurance cover for your business. Be sure to clarify whether you are covered for the risks you have identified in your risk management plan. Keep in mind that insurance policies may have different definitions for certain incidents (e.g. flooding).
You should also check that you:
- have coverage for the loss of income you could incur if customers affected by the crisis stop ordering your product or service
- have appropriate insurance to cover other related issues such as on-site injuries to staff or visitors, or for loss of your customers' goods or materials
- have coverage in case your supplier/s are affected by a crisis and can't deliver necessary supplies for your business
- are meeting your workers' compensation obligations in case any of your staff are injured in a crisis.
Find out more about business insurance.
Accept the risk
You may accept a risk if it can't be avoided, reduced or transferred. Other risks may be extremely unlikely and therefore too impractical or expensive to treat. However, you will need to develop an incident response plan and a recovery plan to help you deal with the consequences of the risk if it occurs.