Coast River Business Journal
BUSINESS COMMENT
Steps to develop your
risk management plan
Prevention is the best insurance against risk
By Jessica Newhall
Clatsop Community College
Small Business Development Center
It has been just over a year since the first
COVID-19 case was detected in Oregon. The
virus’s spread has had catastrophic effects on lives
and forever changed what we once knew as our
way of life. We mourn for those who have lost their
lives, continue to heal the sick, and have come to
accept that to protect our future we must take pre-
ventative measures to stop the spread of the virus
through masks, social distancing and limiting
exposure. The rollout of the vaccine is providing
a renewed sense of hope and optimism and for our
business community there is likely to be a sense of
relief as stability seems within reach.
Jessica Newhall
‘YOUR RISK MANAGEMENT PLAN SHOULD DETAIL
YOUR RISKS AND THE STEPS YOU WILL TAKE FOR
MITIGATING THOSE RISKS FOR YOUR ORGANIZATION.
IT IS CRITICAL TO ALLOCATE TIME AND RESOURCES
TO PREPARING IT AND PUTTING THE PLAN IN PLACE.’
Mitigating the potential impact of threats like
that which we have experienced with this global
pandemic is a critical aspect of business leader-
ship. There is a strategic planning exercise that busi-
nesses can undertake to analyze their organization’s
strengths, weaknesses, opportunities, and threats,
known as SWOT Analysis (or situation analysis).
This framework allows you to solidify what you
do well, address areas where you need to improve,
uncover where areas of growth can be, and under-
stand what risks might exist.
If your organization had done a SWOT analy-
sis in the fall of 2019 and analyzed the threats that
existed, it is unlikely that a global pandemic would
have been a bullet point on the list for you or for
any small businesses in our community prior to the
COVID-19 crisis.
More likely you would have drawn from experi-
ence, thinking through the impact the Great Reces-
sion and Great Coastal Gale of 2007 had on your
business as well as the increased awareness of a
threat of a tsunami. This would have likely led to
a discussion on what preventative measures you
should take to mitigate the business risk should
another major economic downturn, natural disaster
or serious weather event occur.
Perhaps your business did not do that exercise in
2019 — and if there is a lesson from this past year it
is that to ensure business and financial resiliency you
need to constantly be aware of the risks that exist for
your business and take steps necessary to prevent, or
at least lessen, the chance for that risk to have a cat-
astrophic effect. This process is known as risk man-
agement and there is not a better time to undertake
this effort than while your experience with risks’
impacts is still top in mind. Here are the steps you
can take to develop your risk management plan:
Identify the risks: This is a time to gather your
trusted team together and ask the “what if” questions
for your business. Some of the risk categories and
examples you may want to consider include:
• Economic/financial risk can include external
threats such as economic downturns or internal
ones including fraud, embezzlement and poor
financial planning.
• Location or operational risk includes dam-
ages to your business that cause business inter-
ruption such as fire, product failure, loss of sup-
pliers, theft or loss of employees.
• Technology risks to your business can be
computer failure, power outages, cybersecurity,
hacking or lack of back-ups.
• Compliance risk includes understanding and
keeping up to date with all laws and regulations
that govern your business or industry.
• Strategic risk occurs when the business does
not have a sound business plan or strong and
agile leadership, or it poorly executes business
strategies.
Assess the risk: What is the potential severity
and likelihood of this risk on your business?
Manage the risk: What plans can you put in
place to mitigate the risk and who will be respon-
sible for these? For example, to mitigate the threat
of workplace injury, you will implement quar-
terly mandatory safety trainings for your staff. Or
to mitigate the threat of economic downturns, you
will start saving to ensure you have enough cash
reserves to outlast several months of disruption.
Monitor and review: Risk management is not
a one-time effort; it requires continuous assessment
and actions.
Your risk management plan should detail your
risks and the steps you will take for mitigating those
risks for your organization. It is critical to allocate
time and resources to preparing it and putting the
plan in place.
Of course, not all risks are preventable, mistakes
happen and sometimes risk is just part of doing busi-
ness. You will need to understand how much risk
you are willing to take on and act accordingly. Your
best partner in managing risk is your insurance pro-
vider and one of the easiest risk management steps
you can take is to meet with your insurance agent at
least once a year to review your policy and discuss
your coverage. Risk management is possible, you
just need to have a plan and take action.
If you would like to have a facilitated SWOT
analysis session or need assistance developing a
risk management plan for your business, the Clat-
sop SBDC is here to help. Just email sbdc@clat-
sopcc.edu.
Jessica Newhall is the associate director and
Small Business Management program manager
for the Clatsop Community College Small Busi-
ness Development Center. She can be reached at
jnewhall@clatsopcc.edu.
March 2021 • 15
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