You’ve got a good business strategy, investors who back your ambitions, and a talented team by your side. Whether you’re about to open your company’s doors or expand its horizons, you feel optimistic about your business’s future. Like many entrepreneurs, you’re not in this venture alone. You believe you have what it takes to build a winning organization and come out on top.
Unfortunately, ideas rarely unfold 100% according to plan. Some things will go as you thought, and others will steer off course. Most businesses face countless challenges and risks that leaders must learn to navigate. Yet with the right strategies and tools, you can build a well-rounded approach to risk management. Here’s how.
Use Governance, Risk, and Compliance Strategies
Risks usually don’t exist in a vacuum. They’re connected to other factors and influences, including processes, markets, and regulations. Governance, risk, and compliance strategies treat risks as part of a system with dynamic variables. GRC strategies reveal what threats exist alongside laws and industry standards. They also link risks to an organization’s internal procedures and cultural norms.
With the help of a GRC tool, business leaders can see and assess threats from multiple angles. Perhaps you operate an online store and work with a web development agency to build and maintain it. The agency recommends a digital platform that meets industry security standards and complies with consumer privacy laws. However, the platform’s software requires updates to new versions to remain secure and compliant.
Before implementing GRC solutions, you thought you were transferring most compliance and cybersecurity risks to the agency. But by assessing these threats more systematically, you discovered faulty internal processes. The agency recommended a platform update months ago, but no one approved and paid for it.
Now the software is outdated, out of compliance, and a bigger security problem than it should be. GRC solutions help identify these vulnerabilities so you can implement better processes that prevent or mitigate them. Instead of treating risk management as a separate strategy, GRC shows how internal and external variables create or heighten threats.
Plan for Multiple Outcomes
In a perfect scenario, your business plans would go as you envision them. Maybe you’ve got promising ideas for a new product launch. You and your team did the market research, and you’re confident sales will start rolling in. However, reality quickly dampens your initial enthusiasm as you realize your product isn’t quite what the market wants.
The failed launch isn’t as big of a deal if your business has something else to fall back on. Maybe you can quickly adapt the offering. Or you have another new solution lined up to substitute for the one that didn’t take off. Another possibility is to go back to the drawing board while relying on a solid core product line.
Planning for different outcomes and situations can lessen the impacts of business-related risks. Research shows that 65% of new companies fail within 10 years. Some of the top reasons include poor planning and complacency. Sometimes plans and research results can miss the mark or encounter curveballs. The ability to shift to strategies that take the what-if scenarios into account help businesses navigate around the obstacles.
Stay on Top of Market Developments
You might think you have a solid understanding of your market. And while there’s probably a grain of truth there, consumers and markets change. Assuming that your target audience’s needs and wants will remain static places your business in a vulnerable position. You may not be able to cater to trends and shifts in market dynamics.
Inaction, or action that occurs too slowly, might jeopardize your company’s viability. Factors such as new competitors, inflation, and changes in consumer perceptions might impact your industry more than others. Analysts predict that retail and manufacturing will be some of the riskiest industries to work in if there’s a recession. Businesses that operate in these spaces will need more contingency plans than those in less-impacted sectors.
Ignoring what’s happening around you doesn’t make it go away or prevent it. But being aware of market developments and external threats does help you evaluate and prepare for them. A recession may tank the economy, or it might be mild and short-lived. However, predictions of an economic slowdown will likely influence consumers’ behaviors and lifestyles. Leaders who stay on top of market conditions and trends can determine the best courses of action.
Assess Resources and Capabilities
Sometimes businesses have the resources and capabilities to manage risks internally. Other threats are too large or exceed a company’s means. Determining whether you can handle risks involves assessing each one. What is the chance that each threat will happen? And are the effects likely to be mild, moderate, or severe?
Once you map out the probabilities and impacts, you can evaluate whether you have the appropriate resources to respond. If you don’t, it’s best to plan how to transfer the risks you can’t manage on your own. Taking out insurance policies is a typical risk transfer strategy. Another approach is to work with vendors that can bear some or all of the responsibility.
Managed IT services are an example of transferring network and data security risks. Companies that don’t have in-house IT departments rely on outside vendors to provide and manage technical resources. These businesses don’t necessarily take a completely hands-off approach to cybersecurity threats. But they do depend on vendors’ expertise and capabilities to fill in the gaps. Internal resource assessments identify those gaps and ensure they don’t persist.
Sailing Through Challenges
Your business will inevitably face challenges and risks. Knowing what threats you might encounter helps you prepare to get around them. Even if — fingers crossed — all potential risks don’t manifest, the management strategies and tools you implement today will build resilience for tomorrow. Your company will have the necessary resources and processes to navigate its biggest obstacles.