Business Risk Assessment Matrix
When you start any business, you must calculate the risk factors. If you start any venture without doing an assessment of the risks involved, then you may be in trouble from the start. One tool available to you is the business risk assessment matrix. Creating a business risk assessment matrix for your business will help you make better decisions about your business.
The risk assessment matrix helps you to assess the impact of various challenges you are going to face in your business. It is essential for any businessperson to analyze their assessment matrix before starting the business, as well as periodically throughout the life of the business. This is because risks may change as the competitive environment changes, as the business grows and expands into other geographic areas, or as the business changes or expands product lines.
Types of business risks:
- Environmental/Natural Threats: What types of weather risks occur where you are located? Electrical storms? Floods? Tornados? Hurricanes?
- Human Threats: These range from threats to the safety of your staff, such as a gas leak in or near your building, to threats due to human error or malicious intent.
- Technical Threats: Even the most hands-on, service-oriented business these days runs on technology, and most businesses depend heavily upon their technology. Power failure or spikes, software errors, or other communications failures are likely to have significant impacts on your business operations.
Analyze Risk Impact
Here is where the business risk assessment matrix comes in. Use your best judgement to determine how likely any given risk might be, followed by how significantly that risk might affect the business. Finally, realistically assess how well prepared you are now to handle that particular risk to your business. The matrix will help you clearly see which risks are both most likely and most damaging, as well as how prepared you are to handle them. Frank evaluation of these potentials risks will inform your decisions regarding where you need to focus your energies. You may think you already know best, but it is easy to overlook things if you don’t assess them methodically. This matrix will help ensure that you have considered the various threats to your business, and prioritized your response to the most damaging threats first.
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