WORKING IS A RISKY BUSINESS

Successful business people tend to talk a lot about the importance of taking risks. And indeed, they may have risked much to achieve their fortune (although they might not have considered them risks at the time, rather their only way out of a tricky situation).

For most businesses, taking avoidable risks is irresponsible, and many risks can be mitigated if they are planned for.

So what are the biggest risks a business can face? With cyber attacks on the rise, IT problems should always be anticipated.

Health and safety is a substantial one for many businesses, as is protecting and supporting employees properly.

Losing valued and experienced staff to a competitor is another headache which many companies have to deal with. Then there’s operational risk, where companies can inadvertently fall short of their legal responsibilities through slack administration or management.

Financial risks include non-paying customers, a rapid rise in interest rates, fluctuating international exchange rates, unforeseen but essential capital investments or commercial risks, such as the failure of key customers or suppliers.

And then there are the risks or uncertainties that we don’t know about. The USA’s Secretary of Defence, Donald Rumsfeld’s infamous comments in 2002 about the known knowns, and the unknown unknowns can be applied to many business situations.

While he was talking about the lack of evidence linking the Iraq government with the supposed supply of weapons of mass destruction to terrorists, pretty much every business owner can relate his comments to a situation they’ve faced and it’s bang on the money.

He said: “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns—the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”

If you think about the risks too much, it’s going to keep you awake at night. So planning for them and calling in the experts is the sensible thing to do.