Limiting and managing risk in a business is not only critical for the survival of the business; it’s also vital to keep bottom lines healthy. With 50% of businesses saying they spend between 6% and 10% of their revenue on minimizing risk, the cost is rising. But it’s not just the financials that take a hit: your reputation, your brand and ultimately, your customers could be at risk too.
Business risk isn’t simple business anymore
These days, a business is exposed to a wide variety of potential calamities. Some could negatively impact the short term, others have the capacity to stymie business operations for quite some time. This goes wider than compliance, regulation and health and safety. With the increasing complexity of the business world due to digitalization and globalization, the types and severity of risk continue to change.
Here are just a few of the risks a business must contend with in our modern world:
- Loss of highly skilled employees
- Economic fluctuations
- Financial risks (debts, new taxation etc)
- Technology changes
- Legal risks (liabilities, lawsuits, infringements etc)
- Pandemics/global crisis
That’s a whole lot of unknowns, many of which are entirely out of a company’s control. However, there are ways to tackle risk which can also ensure a business is equipped for change, adaptable and able to continuously improve at the same time.
Tackle the areas you know you can change
In order for a business to succeed in modern times, it must be able to evolve quickly, adapt to change and take on new challenges with ease. But not all risk is created equal. For example, business leaders have no control over whether we enter a recession. All they can do is ensure they are equipped to navigate the uncertain times an economic upheaval is likely to cause.
Let’s look at those business risks again, but this time through the lens of areas which a business can control:
|What you can control
|What you cannot control
|Loss of highly skilled employees
|Financial risks (debts)
|Financial risks (taxation)
Rather than try to tackle all these issues head on, a business should focus on areas where the business can be the most positively affected, whilst also preparing for certain uncertainties of the future. We’re going to look into the two which we believe are the most vital.
1. Reduce loss of highly skilled workers
With many organizations prioritizing the upskilling and reskilling of their employees to shrink the ever-widening skills gap, the investment in our people is at an all time high. £6.6 billion, to be exact. According to the Open University’s Business Barometer (which surveyed 1000 business leaders in summer 2020), the cost of plugging skills gaps has risen to £6.6 billion, which is a rise of 39% from 2019.
LinkedIn Learning’s 2021 Workplace Learning Report found that employers expect to offer reskilling and upskilling to just over 70% of their employees by 2025, which is a huge chunk of the workforce. But with only 42% of employees taking up these employer-supported reskilling and upskilling opportunities, it appears that employees aren’t taking advantage of what’s on offer.
Ultimately, if you’re investing that type of money into getting your people prepared for the future, you want to keep them working for you and not take their future-proofed skill set elsewhere. Therefore staff retention and employee engagement should also be high on the list of your business strategies. Consider how you can not only support the acquisition of new skills but also ensure your staff are connected and engaged with the business, so they stay.
And make sure you have essential succession planning in place too. Because with the best will in the world, not every employee you invest in will stay.
2. Address legal risks using artificial intelligence
Regulation and policy changes frequently. Which means keeping your employees well-versed in what it means to be ‘compliant’ and therefore minimize business risk is not always easy. How do you train your employees, prove this training for your audit trails whilst also ensuring the information they need at any given time is easily accessed and consumed? You use technology.
If you’re still using Excel spreadsheets, paper documentation and extensive man-hours to ensure your staff have the information they need to keep your business safe, stop. There’s tech which will do that for you. Consider how you could leverage AI and machine learning to streamline your admin-heavy tasks and make regulation adherence simple and straightforward. You’ll save yourself a bunch of time and can rest easy knowing that a machine will keep this process live, continuous and contextual by continuously detecting possible risk, who might be affected by it and what policies, procedure and training need to be communicated in order to mitigate risk.
You can’t be everywhere at once, so make sure it’s easy for your employees to access policies at the point of need by using smart technology.
Building resilience and improving agility
In many cases, businesses just cannot predict what future risk lies ahead of them. However, by tackling risk which is within your control, you can build vital resilience and future-proof the survival and success of your business and ensure that your foundations are secure and unshakable. By effectively leveraging technology you’ll be able to be much more responsive to constantly changing policies and ensure your employees are aware of these changes.
You’ll also be prepared for a growing skills gap and ensure that your investments are well-placed by focusing on upskilling and retaining your staff. All this risk minimization ensures that your business is well equipped to survive and thrive in change.
Want to learn more about how to prepare your organization for the future? Why not explore our ebook?