Why manage risk?
When you make key business decisions, it's a good idea to think about the risks involved and how you can manage them. If you manage risk properly, you can reduce the impact of unexpected events on your business.
Benefits of managing risk properly
Managing risk can help you to:
- improve your relationships with customers, suppliers, employees and the community, by understanding and managing their expectations
- improve staff confidence in a safe work environment, by having workers’ compensation insurance and workplace health and safety (WHS) policies
- keep your business open during natural or economic disasters, by having an emergency management plan
- reduce your compliance and insurance costs, by having a lower risk of damages.
Taking the time to manage risk properly can also help you to plan for less obvious risks.
Example: Bob's story
Bob is the owner of a takeaway restaurant. He understands the risks to his employees from hot cooking surfaces and sharp objects in the kitchen. He has trained his staff to use appliances and knives safely to reduce the risk of injury. However, Bob didn’t plan for the drop in sales when a new restaurant opened nearby selling similar food.
Bob had noted a common risk to his employees, but failed to plan for a less obvious risk to his business.
Risks that you must manage
You're required by law to manage some risks. For example, you must manage or reduce the risk of:
- accidents and injury by making your workplace safe under workplace health and safety (WHS) laws
- customer complaints by treating customers fairly under Australian Consumer Law
- injury or harm to employees by having workers’ compensation insurance
- damaging the environment by meeting the environmental laws that apply to you.
What risk management doesn't do
Risk management can't predict all future risks. Having a sound risk management plan in place can help you to reduce risks but it's impossible to predict and manage every risk.
You don't always have enough information, knowledge or resources to manage every risk. A good risk management plan will allow you to change your approach if it isn't working or if you come across an unexpected risk.