Due Diligence and Risk Management

In order to keep your business out of trouble, consider:

Businesses face different risks. Case in point, transportation companies have a high risk of vehicular accident involvement while assisted living companies have a high risk of medical mix-ups, patient injury or personal property theft. So make sure you identify the risks specific to your business. You can use past company accident and litigation history as a guide in identifying your specific risks.

Keep in mind you can’t eliminate all risks within your business. You don’t want to waste your precious time and resources on things you can’t change or things that pose a low risk. Investing time and money in mitigating an asteroid strike on your company headquarters is probably not a good use of resources.

Define your risks and identify the ones that pose the greatest risk and the ones you have the most control over. Prioritize the most serious risks for action steps accordingly. There are probably a bazillion risks out there. However, you won’t live long enough the mitigate them all. If you spend more than 60 seconds thinking about a risk, it’s probably not significant.

Formulate proactive steps you can take in order to reduce the likelihood of those risk becoming an accident or a legal case. Consider steps you can actually take and you think will produce results. If you have multiple mitigation options, prioritize and implement them based on how much “bang for the buck” you will get from each one.

Tackle one risk at a time. Focus on your greatest risks first, then move on to the next. This doesn’t mean that you can’t be working on multiple plans at once. It just means you should be sure you have one plan working before pulling the trigger on another.

And last, but not least, the cost of reducing business risks is always much lower than the cost of cleaning up the mess later (accidents or litigation). However, we humans tend to forget this when the problem isn’t in our face. Remember, the reason that risk is no longer a problem is because you took action, not because it isn’t a risk anymore. It’s like a $50 oil change for your car versus a $8,000 new engine. Why didn’t I spend the $50??!

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