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  Every business owner is typically a risk-taker. For you to be bold enough to invest your time, efforts and resources (most especially), means you have or seem to have a shock absorber for risks.
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It is not possible to run a business without encountering risks, and this has come to be one of the major headaches of business owners. These risks are potential hazards and when not managed properly, can destroy the business. Discussed in this article are ways to identify and manage risks in your business, as well as the different risks involved. These are different categories of risks and how they can be identified.

Physical/Location Risk

Physical risks include building and environmental risks. This cuts across fire explosions, building collapse and environmental hazards like gas, toxic fumes, poisonous liquids and waste products. To check this risk and prevent it as much as possible, the following measures should be put in place:
  • Orientate all workers on safety precautions to take.
  • Install fire alarms and smoke detectors.
  • Workers should be aware of the building location and have information about the different exit points.
  • Workers should be properly trained to handle the equipment.
  • Insurance should also be considered.
  • There should be provisions for how to handle natural disasters like flooding, where applicable.

Human Risk

This has to do with danger points relating to the workers on-site, or the employees in the workplace. Alcohol or drug abuse is one of the major risk factors in the workforce. Those involved in these acts should be properly handled, by engaging in counselling and other measures that could help them withdraw successfully. However, a more drastic decision to lay such workers off may be taken, as their persistent indulgence can cause the business great harm. Injury and illness are also human-associated risks. Our bodies are machines, and just like machines tend to break down, humans are also liable to do the same. In such situations, ill workers should take time off to recuperate, so that they can come back to work re-energized.
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The working condition should also be one that will not deliberately tamper with their health. A ‘NO INJURY’ policy should also be given. Where applicable, workers should make use of helmets, safety boots and reflectors which will go a long way to prevent injury.

Technology Risk

As the name implies, this risk is technologically inclined. It covers risks that have to do with the technology and equipment used in the business environment. There is a likelihood that at one point or the other, technology will fail. Power outage, storage loss and abrupt damage are the most common technology risks. Machines should be maintained regularly to avoid breakdown. There should be backup batteries and standby power to deal with a power outage. Files on computer systems and other storage facilities should also be backed up, to avoid loss of important information.

Strategic Risk

This risk is decision-based. It refers to risks that can occur when certain wrong decisions are made regarding the business. It involves management and administrative control. As a business owner, there are market strategies that can be implemented which could ruin the business. This is why it is important to have the right people in the right positions to be able to handle a smooth risk-free strategy development process. An effective way to identify or assess risk is to categorize the risk into:
  1. Be very likely to occur.
  2. Have some chance of occurring.
  3. Have a small chance of occurring.
  4. Have very little chance of occurring.
After identification and assessment of risk, preventive measures should be taken to avoid running into them. However, if and when this happens, insurance will play a huge role. Featured Image Source: Explore Insiders
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This article was first published on 21st August 2021


Chidiogo Shalom Akaelu holds a degree in English and Literary Studies, from the University of Nigeria. She is a freelance writer, editor and founder of Loana Press, a budding online publishing outlet.

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