Risk assessment and management
What is a risk?
In business a ‘risk’ is basically anything that could go wrong and mess with your people, your stock or how well your operations are running.
Risk management is all about figuring out what those potential threats are to your team or your business and then taking smart steps to reduce the chances of them happening and getting ready for them if they do.
Things like fires, slips, bushfires, biosecurity issues or even changes in the economy are all examples of risks.
While you can prevent some risks, others just mean your business needs to be prepared and minimise any potential damage.
Know your business with a SWOT analysis
If you are unsure of where to start with assessing your potential risks, undertaking a SWOT analysis on your business can give you clarity and direction.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats.
A SWOT analysis is a popular tool for identifying and assessing future business strategies.
Using a SWOT template is a great starting point. Download our guide to walk you through the SWOT process.
Some topics to consider when filling out your SWOT analysis:
- Outside of your business, what is important to its operations and what impact would a disruption to this have?
- What are the key services you provide?
- Who are your key staff?
- What are the key resources you use?
- Who does your business rely on?
- Who relies on your business?
- What impact would severe storms have on your business, for example a flood closing roads preventing delivery trucks to access your business?
- What impact would fire have on your business?
- What impact would loss of power or the internet have on your business?
The next steps
Once these threats and weaknesses are clear, list each one individually. For each item on your list consider the following two questions.
- Impact: What would be the consequences for the business if this risk is not addressed?
- Mitigation: How will you manage this risk? Outline the specific steps you will take to reduce the probability of these events occurring.
This can form the basis of a risk management plan that can be reviewed and updated when necessary.
Find detailed instructions on risk assessment and planning and how to make a risk management plan on the Australian Government website.
Risk and the law
As a business owner, you're required by law to manage some risks, including.
- Accidents and injury by making your workplace safe under workplace health and safety (WHS) laws
- Customer complaints by treating customers fairly under Australian Consumer Law
- Injury or harm to employees by having workers compensation insurance
- Damage to the environment by meeting environmental laws.
Discover more information on risk management practices for business.