When you’re starting a business, there are a lot of uncertainties. Will your product do well, will you be able to beat out your competitors, and will you be able to market your business well? But the one absolute certainty you can count on in your business is that things will go wrong.
Whether you get sued by an angry customer or an employee gets injured on the job, you can plan on your company facing problems. Having a risk management plan in place can help you be prepared for these situations. Read on to answer the question, “What is risk management?” and discover the role a PEO has to play in your risk management plan.
What Is Risk Management?
Running a business – any business – comes with risks. That could be as simple as a customer slipping and falling in your store or as complex as one of your employees embezzling money from your company. You could have an employee injured and demanding worker’s comp or you could have a disgruntled former employee sue your company.
Risk management works to foresee those challenges and plan ways to avoid them. It helps you generate plans to deal with problems when they arise so you’re not trying to come up with solutions on the fly. This can also help save you money since you can come up with an efficient approach before the problem even arises.
The first step to a good risk management system is to do risk identification. You and the leaders in your company need to sit down and identify every possible risk your company may run during normal operations. You don’t need to generate a scenario for what you’ll do if an escaped yak goes crashing through the front of your corporate offices, but you do need to cover the more likely risks.
Start by going through the daily processes of your business and looking for areas where things might go wrong. Look at every level of your business ranging from ordering and stocking to any direct selling you may do to management to hiring and firing practices. Then take a look at the overall operations in the longer term and identify any risks there.
Creating a Risk Management Plan
Once you’ve identified all the areas where anything could go wrong, it’s time to make a plan to prevent those risks. You want to look for solutions that will cover more than just one of the risks at a time. For instance, having an employee handbook and detailed employment contacts may eliminate many of your risks in one fell swoop.
If you can’t eliminate a risk entirely, see what steps you can take to mitigate the chances that that risk might happen or the consequences if it does. Only after you’ve eliminated or mitigated as many risks as possible will you move onto risk acceptance. These are the plans for what you’ll do if a risk you can’t otherwise avoid happens.
When you’re in the risk identification stage of your process, you need to identify any unique risks for your company. These are risks that will come as a result of the kind of business you run or where you’re located. For instance, if your business is in a storefront in the North, you may want to put down salt in the winter to prevent falls outside your store.
If you run a manufacturing business of any variety, you may need to deal with special worker’s comp considerations. For office-based businesses, issues like sexual harassment, discrimination, and wrongful termination issues may take the forefront. If you run a restaurant or bar, you’ll need to think about liquor licensing and the risks that come along with that.
Professional Employer Organizations
When you’re setting up your risk management plan, you may want to consider working with a professional employer organization, or PEO. These companies specialize in managing risks for your company. This can bring several benefits for your business.
For one thing, PEOs can bring a level of expertise to the table that could save your company bigtime. They know corporate risks inside and out and can help you find the best solution for preventing, mitigating, or accepting every risk. They also leave you free to focus on the work of running your company rather than worrying about a dozen “what if” scenarios.
A professional employer organization can help you prevent millions of dollars in loss. They know about safety programs and manuals that you can implement to help keep your employees safe and healthy. They can also help you arrange for workplace inspections to make sure safety guidelines are being followed.
A PEO can also get you started with drug testing to make sure you don’t lose money on employees who aren’t working at their best. They can guide you through workers’ compensation insurance. And if an accident does happen, they can guide you through claims investigation, representation, and management to make sure you prevent as much loss as possible.
In addition to helping you prevent loss, a PEO can also help you contain costs for problems when they do arise. They may be able to help you conduct your firing processes in such a way that you reduce your liability for unemployment taxes. And they can help you write detailed handbooks and job descriptions that will help you get the right employees for the job the first time.
A good PEO will consult with you on your employee discipline and termination process to make sure it’s above reproach. They can keep you compliant with unemployment regulations so you avoid costly lawsuits. And they can provide representation for you at claims hearings to help you save as much money as possible.
Learn More About Risk Management
Having good risk management in place is crucial for any company that wants to succeed. Unforeseen circumstances will arise, and you need to be prepared for them when you do. A PEO can help you answer the question, “What is risk management?” and save you thousands.
If you’d like to start putting your risk management plan together, check out the rest of our site at GIGA Solutions. Through our insurance and consulting services, we can help your PEO reach its full potential. Check out our PEO solutions today and start heading risks off before they happen.