Why risk identification is essential for business growth

Fall down seven times, get up eight. That’s how it usually goes, isn’t it? What if you didn’t have to fall down once? Risk identification is an early onset process that can prevent risks of all sizes to ensure your business never falls and continues to grow.

What exactly is risk identification?

Risk identification is the process of identifying potential risks and their characteristics (Study.com) in hope to control and prevent them. The result of a risk identification is usually a risk register. This is where all potential risks are listed along with how to resolve them (Study.com). It’s the first and one of the most important steps in the risk management process outlined below:

1. Risk identification
2. Analyse risk
3. Evaluate and rank the risk
4. Treat the risk
5. Monitor the risk (CPD, 2016)

Why is it so important?

As I mentioned earlier, risk identification is important because it helps manage and prevent issues from happening - if you don’t identify a risk, you won’t be able to prevent it. No matter the size, each risk has the potential to negatively impact a business. Identifying a risk in its early stages will minimise any potential impact and if all goes to plan, will allow the business to operate as normal.

Risk identification has the power to prepare a business for the worst. Even though it may not happen, having carefully mapped solutions ready will minimise as much negative impact as possible. Preparation is the key to success in any business and absolutely essential for risk identification.

Examples of risks

Tools that are useful for preventing risks

There are many tools that you can use to prevent risks from happening. The key to preventing as many risks as possible is to cover your bases right from the very start. Here are some tools/strategies that will help you prevent future risks in your business.

1. Interviews

   When interviewing staff for the job, don’t be afraid to ask hard hitting questions. You want to interview thoroughly so that you hire the right person for the right job. This will help eliminate as many internal risks related to employees as possible.

2. Policies and business guidelines

   Review these regularly. You want to make sure you are always compliant as a business. Ensuring your staff are aware of ANY changes you make to the business guidelines will eliminate any risk of failing to comply. Staff performance reviews will also help with this.

3. Performance monitoring

   This isn’t just regarding staff. While performance reviews for staff behaviour are vital for any business, remember to monitor the performance of software, servers and equipment too. This will ensure you eliminate any risk of infrastructure failure.

4. Risk register

   This tool is a MUST. As I mentioned earlier, this is where you will list potential risks and possible sources/solutions for each. This should be a document everyone has access to or is aware of. It should also be a document that is updated regularly.

5. Monitor ALL risks

   All previous risks should be kept on file. Whether it’s an old risk register or previous call logs to fix an issue, they should all be documented. Keep an eye on all of these - past, present and potential risks.

You are now risk prepared

Unfortunately, there will always be risks, some harder to prevent than others. But at least now you know how to identify and manage the ones you saw coming. To read more on how to manage competitors as an external risk, check out this blog.