Know the pitfalls of running an SME before you encounter them first-hand.
Cocid-19 threatens a variety of businesses (and SMEs in particular). Among many other issues, the government’s moves to contain the public health risk may well have caused a sudden drop in demand for your products or services, as well as a shortage of staff and disruption to the supply chain.
Because of less demand, a business can be strapped for cash. Who knows how long the Covid-19 crisis will last? If the crisis is prolonged, consumers will probably either consume less or change how they buy. Now is the time to activate a robust strategic plan to try and properly position your business to navigate the Covid–19 crisis and be prepared for rapid recovery when things turn around.
Risk management strategies can help you navigate through all the disruption and help pull you through the hard times. Having such strategies in place could also help with implementing risk management solutions. However, consider looking out for common pitfalls SMEs often encounter when managing risk.
Not identifying risks and their impact
If business leaders have learned anything in recent months, it should be that surviving (let alone thriving) in difficult times requires being prepared for the unexpected. It’s unlikely that many will have anticipated a global pandemic, but, with regard to managing risks, some companies might have been better equipped than others.
However, not all risks are created equal. Don’t expect that everything will end up having the exact same effect on your business. Not all problems will present themselves in the same way either.
This taxonomy – large or small impact, high and low probability – is the most prevalent form of risk assessment by businesses. However, even seemingly low-impact risks need to be closely monitored as major incidents for a company can occur from a series of small issues, mistakes and missed chances of containing things. One scenario we often see is where a business lacks strong financial processes and controls, and the loss of a key member who has informal wisdom about how things are done can have a huge impact.