All the companiesas perennial as they may be, are exposed to events that can hinder their success. Companies that carry out optimal risk identification will be better equipped and will have a better way of managing these risks.
This guide shows the right way to recognizing risks that a company may face. It also explains how to set up a policy as well as a optimal risk management program which can increase your company's chances of success and reduce the likelihood of failure.
- Risk management processes
- Classification of risks you may encounter
- Risks in the strategy and those relating to compliance
- Risks in the finances and in the operations
- How to make a risk assessment
- Taking precautions to ensure business continuity
- How should risks be managed?
- Insurance ideal for optimum protection against loss
Risk management processes
The management of these risks must be predominant place in the strategic policy of any company. This allows your company :
- Identify through various methods the your business risks,
- Correctly assess probabilities errors and negative events,
- To understand the how to respond to these events,
- Implement a system to face their consequences,
- Monitor whether your approach and control on risk management has been efficient.
As a result, this process :
- Will improve decision-makingand the choice of priorities,
- Help you better manage and allocate capital and resources,
- Will enable you to prevent all adverse events.
Risk management will take on even greater importance if your company decides to explore other areas, such as the sale of a new product or entering new markets. The fact that the competition is following you into these new markets, or technological advances causing your product to become redundant, are two risks you may want to consider.
Typology of risks your company could face
There are several types of risk to consider, including :
- Visit strategic riskslike the arrival of a competitor in a market
- Risks relating to compliancesuch as the entry into force of a new health or safety legal provision
- The risks financialsuch as customer payment incidents or higher interest charges on commercial loans.
- The risks operationalsuch as theft or breakdown of important equipment
These categories can be modulated, and certain parts of your company could fall victim to more than one of these situations. The risks inherent in data protection, for example, could be considered in the choice of your company's operations, as well as in your company's compliance.
You can also find :
- Risks related to the environment including natural disasters,
- Risk management, which involves human resourcessuch as maintaining an optimal number of employees and replacements, employee safety and updating their skills,
- Risks relating to economic conditions and political in all external markets to which you do business goods exports,
- Risks concerning health and safety.
Strategy risks
Visit strategic risks are those that can be associated with operations in a particular industry.
These risks are composed of :
- Activities d'acquisition or merger
- From changes of customers or request
- From new products in the industry
- New research and innovations in the development
So, for example, you might consider the strategic risks of a US-based company buying a competitor in Canada. This would enable the American company to set up a new subsidiary in Canada.
For example, you may want to consider :
- If there is a third-party company has sufficient cash or a good stock market rating to carry out this operation
- If there is a competitor in Canada which could be acquired, for example, due to a cash crisis
- If a American society lower its prices or invest more in research and development.
Compliance risks
Risks relating to compliance are those that you can associate with the need to respect laws and all other regulations. They are also taken into account in the need to act in a certain way that investors expect. This involves, for example, guaranteeing corporate governance.
You might also consider the fact that the legal framework The impact of labor, safety or health issues could increase expenses or force you to modify your working methods.
You should also consider some legislative risks for your company. You need to ask yourself whether the services and products you want to sell can be sold according to current laws or taxation (as in the case of tobacco and asbestos). So, for example, questions about the rise in obesity could lead to stricter regulations on food labelling, which could increase expenditure or reduce the attractiveness of certain types of product.
Financial and operational risks
Visit financial risks are associated with risks that may affect financial structure of your company, the various transactions by your company and the financial system that you have chosen to implement.
Optimal identification of financial risks requires scrutiny of daily financial transactions and, in particular, the treasury. If your company is dependent on a single customer, and that customer doesn't have the means to pay you, this could have serious consequences for your company's survival.
You can examine :
- The way you tune a credit to a customer
- Your receivables
- The measures to be implemented to ensure a better cover
Financial risk must take into account external factors as the exchange rates and the interest rate. Variations in rates will have an impact on the repayment of your receivables and the competitiveness of your services and products compared with those from abroad.
Risks related to operations
Visit operational risks are those related to administrative and operating procedures of your company. This includes :
- Hiring employees
- Financial audits
- Visit IT systems
- Miscellaneous regulations
- Visit supply chain
- The Board of Directors and its composition
You need to analyze these operations one by one and establish a risk priority. You then need to plan for solutions in the event of one of them occurring. So, for example, if you are dependent on a supplier for an important raw material, you need to consider what might happen if that supplier withdrew from the market, and look for alternative suppliers to reduce the risk.
Risks concerning TI and data protection are becoming increasingly important in the business world. A secure IT system using encryption methods will protect your business and customer data.
How do you assess risk?
Risk assessment will enable you to better determine the nature of these risks, and decide whether to accept them or do your best to minimize them. To assess risks, you need to classify once they have been identified. This can be achieved by considering the consequences and potential of each risk.
There are tools that you can use to help you with therisk assessment. You can make a plotting on a risk mapA risk's significance and possibility of occurrence. Each risk is rated on a scale of 1 to 10. If a risk has a rating of 10, this means that it is of particular importance to the company. A rating of 1 is the least important. The map will give you a visual idea of the risks their relationship to each other, to appreciate their extent and to plan types of controls to mitigate it.
Visit risk prioritizationno matter how you do it, you'll be able to focus money and time on risks of particular importance. You can introduce systems and controls to cope with the adverse consequences of an event. This could have an impact on the definition of a decision-making process as well as procedures which will enable us to call on the higher echelons to be followed in the event of an event occurring.
Employ preventive measures to ensure business continuity
Risk management involves l'introduction of a process, tools and methods to deal with the adverse consequences of certain events that you have identified as potentially significant threats to your business. This could be as easy as offering a highly effective IT backup guarantee and procedures supporting IT to act against system failures.
Programs that deal with threats are called visit business continuity plans. They will guide you in what to do in the event of an adverse event, such as a fire ravaging your office. You can't anticipate and avoid every risk, but these business continuity plans can reduce disturbance suffered by your company.
Risk assessments will change as your business grows, or because of external or internal changes. This means that the risk management process in place must be updated on a regular basis. Such updates will help to identify process improvements that need to be added, and may also demonstrate the uselessness of an old process.
How do you manage risk?
There are many ways to manage risk. Among them are these 4 ways of dealing with or managing an identified risk. You can :
- Choose from l'accept
- Choose to transfer
- Attempting to decrease
- Choose theeliminate
So, for example, your decision could be to accept a risk, since the price linked to total elimination would prove too expensive.
You may also decide to transfer the risk, which is generally done through theinsurance or decrease risk in introducing new safety rules.
Finally, you can also change the method you use to manufacture the product in order to eliminate risk.
Risk management is not a one-time process. Monitoring and regular updates are important for a successful approach to risk management. A monitoring will ensure that risks have been properly defined and analyzed, and that appropriate adequate controls have been implemented.
All this can be formalized in a a risk management policy. The latter will be even more effective if you assign employees to manage these risks.
Choose the right insurance to protect you against loss
Insurance won't reduce your company's risk, but you can use it to a financial device that will protect against losses linked to certain risks. This means that in the event of a loss, you will benefit from a compensation. This can be useful for continue your activities.
SADC Achigan-Montcalm: Who are we?
To help you manage your business efficiently and exploit its full potential, the SADC offers you :
- an array of management consulting
- solutions corporate financing
- and a support for collective projects.
How to find us
As a regional player, we serve companies belonging to one of the following communities from 10 municipalities of the Montcalm MRC as well as municipalities belonging to the L'Assomption RCM (municipalities of L'Assomption, L'Épiphanie and Saint-Sulpice). We also operate for municipalities in the Rivière du Nord RCMSainte-Sophie and Saint-Hippolyte.
In other words, we serve the municipalities of Saint-Hippolyte, Saint-Calixte, Sainte Sophie, Saint-Lin-Laurentides, Saint-Julienne, Saint-Esprit, Saint-Roch-Ouest, Saint-Roch-de-l'Achigan, Saint-Liguori, Saint-Alexis, Saint-Jacques, Sainte Marie-Salomé, L'Epiphanie, L'Assomption and Saint-Sulpice. However, the municipalities of Repentigny and Charlemagne are not eligible for our financial assistance. Our offices are located at 104, rue St-Jacques in Saint-Jacques.
We believed in their project and they put their trust in us.
Since our creation in 1992, we have supported a large number of entrepreneurs in their business transfer, start-up or growth objectives. These include :
Solnor EnvironnementSolnor Environnement is an expert consultant for contaminated land and geology. Solnor Environnement's core business is the management of projects with a geological component, the analysis and study of soil and water, their decontamination and the environmental analysis of sites.
Lait de poule inc. the maternity and nursing specialist in l'Assomption, offering clothing and textiles for pregnant women and textiles to facilitate breastfeeding.
Brasserie L'Apothicaire of St-Jacques de Montcalm, whose mission is to support an ecosystem of regional microbreweries, and to help and contribute to the emergence and development of local players offering products of excellence.
The integration company Job Access Buffet whose core mission is to provide a gateway to the job market in the catering sector.
While these players belong to a wide variety of economic sectors, the fact remains that our approach, which focuses on the local level and on serious, well-thought-out support tailored to their objectives, has contributed to these successes. success stories. Behind each of these entrepreneurs was a ambitious project, and we are proud to present their success..
SADC can help you develop your business. Call on our team to bring your entrepreneurial projects to fruition.
