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Business Risk

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Business risk comes in five basic parts; however, they are very rarely independent of each other with an event creating risk in more than one category. The point is to identify what the risk is to your business then follow the risk management process, of firstly eliminating the risk, then reducing the effects of the risk and finally protecting yourself against any residual risk.

Below are listed the five elements, which should help to identify those risks that may apply to your business, from there you should be able to Eliminate, Reduce or Protect against that risk. It may help to talk to peers or other business owners, that may have already come across these risks and whose advice may save you time and may also be a source of future work or co-operation.

  1. Strategic Risk

It’s the risk that your company’s strategy becomes less effective and your company struggles to reach its goals as a result. It could be due to technological changes, a powerful new competitor entering the market, shifts in customer demand, spikes in the costs of raw materials, or any number of other large-scale changes.

Failure to adapt to a strategic risk can lead to bankruptcy, facing a strategic risk doesn’t have to be disastrous, however, if you are able to adapt to the new conditions and change your business model, the company can survive the strategic risk.

  1. Compliance Risk

Are you complying with all the necessary laws and regulations that apply to your business?

Of course you are (I hope!). But laws change all the time, and there’s always a risk that you’ll face additional regulations in the future. As your own business expands, you might find yourself needing to comply with new rules that didn’t apply to you before.

Finally, even if your business remains unchanged, you could get hit with new rules at any time. Perhaps a new data protection rule requires you to beef up your website’s security, for example, or employee safety regulations mean you need to invest in new, safer equipment in your factory, or perhaps you’ve unwittingly been breaking a rule, and have to pay a fine. All of these things involve costs, and present a compliance risk to your business.

  1. Operational Risk

Operational risk refers to an unexpected failure in your company’s day-to-day operations. It could be a technical failure, like a server outage, or it could be caused by your people or processes.

In some cases, operational risk has more than one cause. For example, consider the risk that one of your employees writes the wrong amount on a check, paying out £100,000 instead of £10,000 from your account.

That’s a “people” failure, but also a “process” failure. It could have been prevented by having a more secure payment process, for example having a second member of staff authorize every major payment, or using an electronic system that would flag unusual amounts for review.

In some cases, operational risk can also stem from events outside your control, such as a natural disaster, or a power cut, or a problem with your website host.  Anything that interrupts your company’s core operations comes under the category of operational risk.

While the events themselves can seem quite small compared with the large strategic risks we talked about earlier, operational risks can still have a big impact on your company. Not only is there the cost of fixing the problem, but operational issues can also prevent customer orders from being delivered or make it impossible to contact you, resulting in a loss of revenue and damage to your reputation.

  1. Financial Risk

Most categories of risk have a financial impact, in terms of extra costs or lost revenue, but the category of financial risk refers specifically to the money flowing in and out of your business, and the possibility of a sudden financial loss.

For example, let’s say that a large proportion of your revenue comes from a single large client, and you extend 60 days’ credit to that client, in that case, you have a significant financial risk. If that customer is unable to pay, or delays payment for whatever reason, then your business is in big trouble.

Having a lot of debt also increases your financial risk, particularly if a lot of it is short-term debt that’s due in the near future and what if interest rates suddenly go up, and instead of paying 8% on the loan, you’re now paying 15%? That’s a big extra cost for your business, and so it’s counted as a financial risk.

Financial risk is increased when you do business internationally, exchange rates are always fluctuating, meaning that the amount the company receives in GBP will change. The company could make more sales next month, for example, but receive less money. That’s a big financial risk to take into account.

  1. Reputational Risk

There are many different kinds of business, but they all have one thing in common: no matter which industry you’re in, your reputation is everything.

If your reputation is damaged, you’ll see an immediate loss of revenue, as customers become wary of doing business with you, but there are other effects as well. Your employees may get demoralised and even decide to leave. You may find it hard to hire good replacements, as potential candidates have heard about your bad reputation and don’t want to join your firm. Suppliers may start to offer you less favourable terms. Advertisers, sponsors or other partners may decide that they no longer want to be associated with you.

Reputational risk can take the form of a major lawsuit, an embarrassing product recall, negative publicity about you or your staff, or high-profile criticism of your products or services and these days, it doesn’t even take a major event to cause reputational damage; it could be a slow death by a thousand negative tweets and online product reviews.

Conclusion

In conclusion it’s important to identify the risk, however it manifests itself, at which point you need to adapt your process or systems to enhance your risk protection, by adapting or diversifying you should be able to keep major risk at arm’s length, but don’t be complacent, you must keep your eyes open at all times for anything that may cause harm to your business and be ready to react as soon as possible, not all risks exist at this moment in time, they may appear tomorrow.

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Accidents & Ill Health; It pays to know the facts

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Each year employee accidents and ill-health cost British employers an estimated £3.9 billion to £7.8 billion, of which £910 million to £3,710 million comes from accidental damage to property and equipment.

It’s often assumed that insurance will cover any financial losses. But policies generally fall short when it comes to costs involved in the general day to day running of a business. The shortfall can be startling:
• Uninsured losses are ten times the cost of insurance premiums paid. (Source: HSE)
• Uninsured losses from accidents in smaller firms add up to £315 per employee, per year. (Source: Norwich Union Risk Services)

Other cost implications that are often overlooked include:
• Dealing with the incident – Immediate action means downtime for the injured person and anyone assisting. Time spent administering first aid treatment, a hospital referral or home rest, all result in downtime. Making the area safe and making machinery serviceable are more costs for which the business is accountable.
• Investigation of the incident – Time spent reporting the incident, holding meetings to discuss it and investigating it internally are the first step. Then time spent with an HSE, or Local Authority inspector and external consultants’ fees to assist with the investigation can rapidly accumulate into hidden costs.
• Getting back to business – Rescheduling work, recovering production, repairing damage and cleaning the site are inconveniences which slow production and reduce efficiency. Hiring replacement tools, people and equipment might also be required.
• Business costs – Absentee costs are deceptive. Besides the salary of the injured worker, a combination of replacement staff salaries, lost time, reduced productivity and quality add to escalating costs. Training new or temporary staff, overtime and contract.
• Increased insurance costs – higher premiums following an incident, cost associated with conditions being applied in order to gain cover.

It pays to fulfill your legal obligations with regard to Health & Safety, this way you reduce the chances of having a claim refused and all the additional costs listed above, which will probably include the cost of fulfilling those obligations in the first place. So why pay twice?

For assistance contact us at www.anchorhands.co.uk

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Assessment

Good health and safety at work is important not only in human terms, to help reduce workers’ pain and suffering. It is also a way of ensuring that enterprises are successful and sustainable, and that economies thrive in the long term.
For most enterprises, simple cost benefit analysis will not be necessary or appropriate in this area. Businesses have moral Occupational Health & Safety obligations, as well as legal and financial ones. It is impossible to quantify costs such as suffering in monetary terms.
Nevertheless, there are quantifiable costs and benefits involved in OSH, which businesses should be aware of.

Getting Health & Safety Right!
For enterprises, good Health & Safety helps to:
• enhance ‘brand image’ and ‘brand value’ as a socially responsible business (which may affect investors’ decisions)
• reduce absences and increase the productivity of workers
• increase motivation and the commitment of employees to the business
• reduce business costs, such as insurance premiums, and business disruption
• enable enterprises to meet and exceed customer expectations.

Getting Health & Safety Wrong!

If businesses get Health & Safety wrong, the costs of accidents and ill-health can be substantial.
For the individual, there are the costs of care, loss of earnings etc.
For businesses, disruption, claims for damages, loss of goodwill and loss of confidence in management can sometimes lead to total collapse. For small companies particularly, occupational accidents can have a major financial impact.

So Why Invest in Health & Safety?

Research shows that investing in Health & Safety leads to better company performance.
A good working environment is good business.

All workers have a right to work in places where risks to their health and safety are properly controlled.

Health and safety is about stopping them getting hurt at work or ill through work.

What employers must do for employees

Decide what could harm them in their job and the precautions to stop it. This is part of risk assessment.

In a way they can understand, explain how risks will be controlled and tell them who is responsible for this.

Consult and work with them and their health and safety representatives in protecting everyone from harm in the workplace.

Free of charge, give them the health and safety training they need to do their job.

Free of charge, provide them with any equipment and protective clothing they need, and ensure it is properly looked after.

Provide toilets, washing facilities and drinking water.

Provide adequate first-aid facilities.

Report injuries, diseases and dangerous incidents at work to the HSE

Have insurance that covers them in case they get hurt at work or ill through work.

Display a hard copy or electronic copy of the current insurance certificate where they can easily read it.

Work with any other employers or contractors sharing the workplace or providing employees (such as agency workers), so that everyone’s health and safety is protected.

What employees must do

Follow the training they have received when using any work items the employer has given them.

Take reasonable care of their own and other people’s health and safety.

Co-operate with their employer on health and safety.

Tell someone (their employer, supervisor, or health and safety representative) if they think the work or inadequate precautions are putting anyone’s health and safety at serious risk.
If you would like to discuss how to improve the health and safety of your business then please feel free to contact us via our website www.anchorhands.co.uk

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Get your H&S in order

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As a new calendar year approaches, it’s time to get your Health & Safety in order. All businesses, companies and organisations will benefit from having a simple yet robust system in place to assess, control and monitor their health and safety issues. If you employ 5 or more people (employ does not necessarily mean pay, volunteers count as employed) then you are legally bound to produce a written health and safety policy, with the necessary procedures in place to make it happen, that said there is no reason why you shouldn’t have the same even if you employ less than 5 people.

If you own or operate premises then you must carry out a fire risk assessment of those premises, again if you employ 5 or more people then this assessment must be formally written. A fire risk assessment will drive out any necessary actions to make the premises in which you work, safe from fire. This will include housekeeping, training and maintenance items such as servicing of extinguishers and testing of electrical appliances.

In both cases above, it is essential that once produced these documents are reviewed whenever there are any changes, which affect either the building or your work practices, or at least annually.

It may be that you already have procedures in place that might benefit from being given a review by a third party, or you might like to have an independent eye check that your systems are being operated correctly, either way now is the time to make sure that your health and safety is given the attention it needs to ensure that everyone you are responsible for, is kept safe.

For more information or advice please contact us via www.anchorhands.co.uk

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Health & Safety Management Systems – Why Bother?

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When someone uses the phrase “management system” it conjures up an image of an office full of clerks, busy filling in endless reams of paper, without anyone actually knowing what the end result is. This does not need to be the way, especially when it comes to health and safety, the object of the exercise is to have a system that works for your needs, one that not only gives you results but also achieves its objectives of keeping you and everyone else safe. 

A health and safety management system can be as simple as a one page set of tick boxes, to make sure you haven’t forgotten something important, right up to an OHSAS 18001 system which not only controls everything you do with health and safety, but can be audited to an international standard as well as demonstrating that you are working to best practice. The important thing is that the system should do what you want or need it to do, it should not create procedures for the sake of it and should be clear in its results and observations.  

Given that a health and safety management system can be simple, certainly shouldn’t be excessive and will produce clear results, what will we gain from having one and how much is it going to cost? There are some very simple answers to these questions:

 What will we gain? 

A safer working environment, Less absenteeism, Increased production, Happier workforce,  Customer recognition, Peer recognition, Mitigation against legal costs, Defence against legislation breeches, Lower insurance costs &  Access to additional work opportunities.  

How much will it cost? 

Debit:  

Producing the system, Necessary capital expenditure (guarding etc), Training costs of personnel,  Monitoring & auditing

  Credit: 

Less absenteeism, Increased production, Lower legal costs, Lower insurance costs, Mitigation against fines and claims, Maintenance of company reputation, Increased tendering opportunity

 

Taking all of the above, together with many more benefits, it can be seen that the reasons we bother are simple, a well produced health and safety management system will help you keep all around you safe thus avoiding absenteeism, lost production and legal claims against you, it will help you comply with current legislation avoiding legal costs, it will demonstrate to customers and your peers, that you are a company they would like to do business with, it can help keep your insurance costs down, maybe even reducing them and it could provide the conditions that will allow you to access many other tendering opportunities.

 So, why bother? 

Increased profitability

 Increased reputation and profile 

 Happier, more productive workforce

Increased work opportunities

Legal compliance

Because it’s the right thing to do!

 If you would like to know more about how effective a health and safety management system can be or to discuss any other matters relating to health and safety, then please contact us via our website at www.anchorhands.co.uk

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