The final ranking for this scenario then would be 6.0/20 – a 6.0 average for the impact it would have on your business and a 20% chance of it occurring. Though the chance of it happening is low, you can still do something to reduce the impact of a robbery if you wish. For instance, you could install another security camera or two, keep less cash on hand, add more lighting in the parking lot – the list goes on. But before you call a security company or electrician, think more about the crisis itself. Is the potential impact worth the cost? How much will it cost you to add these extra security features? Is it substantially more than it would cost to do nothing? Conversely, how would the numbers change if you arm your employees and encourage them to be proactive rather than reactive? Is that worth the money you’d lose? As you run the numbers, remember that there are usually two levels of cost. There are hard costs and soft costs. Hard costs are the actual dollars a crisis costs you, which can include preventative measures or losses in income caused by the situation.
In contrast, soft costs are the things you can’t always readily see: decreased productivity, increased absenteeism, workers’ compensation claims, increased turnover, erosion of community support, bad publicity, etc. Depending on the crisis at hand, the cost of intervention may appear to equal the hard costs of a possible loss. But the soft dollar losses can create a draining effect on your business as you continue to lose revenue long after the initial crisis has passed, often without noticing it until it’s too late. Typically, the more attention your crisis receives in the news, the more likely you will experience a cost in soft dollars. This soft dollar loss can occur over weeks, months or even years. You want to go through this process and analyze hard and soft dollar costs for each crisis you have identified. Here’s a sample worksheet so you can see how a completed analysis looks. The identified crises are those of a midsized retailer, but you’ll get the idea of how it all works.
www.commerce.wa.gov
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