A risk management plan can help minimise the impact of risks that could weaken your cash flow or damage your brand. It will also help create a culture of sensible risk awareness and management in your business.
Our Crisis planning template and checklist includes a risk management plan:
Follow these steps to create a risk management plan that's tailored for your business.
1. Identify risks
What are the risks to your business?
For example:
- flood
- data breach
- contamination
- power outage
Some risks will cause major disruption while others will be a minor irritation.
2. Assess the risks
Assess the risks that you've identified.
Try to estimate the:
- potential severity of each risk
- likelihood that it might happen
Prioritise your risk planning based on the results of your assessment.
3. Minimise or eliminate risks
Some risks are preventable, so eliminate or minimise these where possible. For some risks, it might be as simple as installing an alarm system or buying extra personal protective equipment (PPE).
Check your insurance
Insurance is one way to reduce the impact of an event or disaster.
For example, business interruption insurance can make sure that you receive your average earnings for the insured period until you're able to start operating again.
Make sure your insurance is enough to cover you in the event of a significant disruption to your business.
4. Assign responsibility for tasks
Identify what needs to happen if a crisis or disaster occurs and who is responsible for each action. Having clear directions is one of the simplest and most powerful tools for a fast recovery.
5. Develop contingency plans
Come up with contingency plans for how you'll continue or resume your operations if a crisis occurs. Your contingency plan is basically your 'plan B' for risks that you can't avoid completely.
Your contingency plans will depend on the:
- type, style and size of your business
- extent of the damage
6. Communicate the plan and train your staff
People in or connected to your business must be aware of the strategies you've put in place to mitigate or recover from a disaster situation.
To do this:
- Decide if you'll communicate by phone, email, text or other means.
- Create procedural statements.
- Inform the relevant people (such as staff, suppliers, contractors and service providers).
Next, train your staff in your procedures and have them practise. This way if a disaster occurs, the process can take over and guide the staff.
7. Monitor for new risks
Risks can pop up during day-to-day operations, so it's important to know how to identify potential risks before they escalate.
Continuously monitoring for risks will help you develop realistic and effective strategies for dealing with issues if they occur.