What are the 5 main risk types that face businesses?

All businesses face risks around strategy, profits, compliance, environment, health and safety and so on.

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The Top 50 Business Risks
Download the full list of Business Risks
Word download - The Top 50 Business Risks (Word)
PDF download - The Top 50 Business Risks (PDF)
20 Common Project Risks - example Risk Register
Checklist of 30 Construction Risks
Overall Project Risk Assessment Template
Simple Risk Register - Excel template
Business Risk - references and further reading
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Risk is simply uncertainty of outcome whether positive or negative (PRINCE2, 2002, p239).
Business risk is uncertainty around strategy, profits, compliance, environment, health and safety and so on. stakeholdermap.com

Common business risks include: market acceptance, time-to-Market, incompatible product fit, difficult-to-sell and loss of political support.

Use this list of the top 50 business risks to identify the risks that you may face in your business.

The Top 50 Business Risks

1. Assets - risk to buildings, assets e.g. fire, flooding

Insure assets
Compliance with fire & building regulations
Early warning systems e.g. smoke alarms, sprinklers.

2. Bad debt

Credit checks
Set credit limits
Set payment terms for suppliers
Use debt collection agency

3. Bankruptcy of suppliers or clients

Check financial background
Use business intelligence agencies
Early warning indicators e.g. late payment
Avoid single source dependence
Good record keeping

4. Brand fatigue

Use analytics to measure engagement/CTR etc.
Provide personalized useful insights
Less may be more
Create creative, entertaining content

Have a clear vision
Set clear goals and objectives
Regularly review strategy against market conditions

6. Cashflow

Improve cashflow management
Review costs and inventory
Accountancy software use/replacement
Careful use of long and short term financing

7. Client attrition

Use customer success managers
Engage throughout the customer lifecycle
Sell to the right customers
Provide value
Monitor trigger events e.g. change of ownership/Senior management team

Keep reading for a free download of the Top 50 Business Risks!

8. Competition: aggressive marketing

Gather intelligence and assess risk
Deploy a defensive strategy
Flip the negative messages e.g. if competitor says your company is too small, push your agility and ability to focus on your customers
Use an industry research and advisory firm like Gartner or Forrester, to scan for competitive risk

9. Competition: better intelligence

Invest in intelligence tools e.g. social media monitoring
Improve competitive analysis
Outsource to or engage consultants e.g. BrandTotal

10. Competition: legal action

Reduce contractual disputes with contract advice and standard terms and conditions
Train employees on legislation, e.g. around harassment, bribery, etc
Insure against the risk of legal action
Have inhouse counsel or retain a legal firm

11. Compliance with regulations, laws etc

Employee training and refresher courses
Seek legal advice on contracts, new legislation and industry specific regulations
Create a quality assurance team
Implement more quality and safety checks

12. Copyright theft - theft of your copyright or action against your business

Register work via a copyright registration service
Mark all work with a copyright notice, include in all footers etc
Take prompt action on infringment
Train employees to recognise infringment and to avoid infringing copyright in the materials they produce on behalf of your business
Use stock footage and images

13. Cost of components - increase or decrease

Develop a dedicated strategy for components that are subject to volatility
Use financial and operational hedging
Monitor pricing trends
Manage inventory to soften impact of price changes e.g. stockpile

14. Customer satisfaction low

Identify the source of low satisfaction e.g. is it difficult to do business with your company or is product quality the problem
Use Customer Relationship Management Software
Review product quality increase quality controls
Implement CSAT surveys or similar to monitor sentiment
Invest in employee including sales training

Keep reading for a free download of the Top 50 Business Risks!

15. Data security

Get the essentials in place e.g. anti-virus, firewalls, password use, whitelisting, access control, SSL, SSO
Network and data encryption
Conduct component driven and system driven risk assessments
Conduct security audits
Lock down hardware e.g. company laptops, disable USB, company image if employees bring their own device
Have a procedure which will be triggered in the event of loss or a suspected attack

16. Difficult-to-sell product

Consider focussing on solutions rather than the product
Review marketing materials, sales plays, provide additional sales training
Are the right customers/markets/locations being approached?
Identify the unique selling point
Improve market research and Research and Development
Repurpose product
Decomission product

17. Environment - natural or business environment

Risk to employees of extreme weather - ensure safe temperatures at work, access to water, home working in bad weather, support with travel, accomodation etc
Risk to facilities, buildings, resources, materials - insurance e.g. buildings and contents, invest in storm protection, fire prevention etc
Develop an emergency prevention and recovery plan

18. Espionage (commercial)

Identifying your most valuable data and conduct a risk assessment
Establish effective security policy - such as prohibiting password sharing and bringing your own devices to work
Maintain efficient data access policy
Secure your infrastructure. such as firewall and anti-virus, separate valuable data from your corporate network and prohibit access to it. Protect border routers and establish screen subnets
Educate employees e.g. teach them about simple security practices, that they should incorporate in their daily workflow - lock unattended laptop, use strong passwords, challenge people without ID etc
Conduct background checks
Create proper termination procedure
Monitor employee activity

19. Exchange rates e.g. forex

Accept the risk and buy or sell currency in the spot market
Fix rate via a forward exchange contract
Insure against the Forex risk
Use an Forex structured product

20. Failure of utilities e.g. water, electricity

Back up generators and/or off grid solutions
Water storage on site or own bore hole
Move location for more reliable supply e.g. rural locations have more/longer black outs
Change products/processes to reduce reliance on utilities e.g. require less water

21. Health and safety

Create a health and safety policy
Identify hazards
Evaluate the risks and complete a risk assessment
Provide staff training e.g. on manual lifting
Have procedures for reporting incidents.

Keep reading for a free download of the Top 50 Business Risks!

22. Lack of office space

Consider flexible working options e.g. working from home and hot desking
Obtain longer leases or buy freehold office space
Consider relocation

23. Lack of skills/expertise

Use government scheme e.g. apprenticeships
On the job training
Automate
Offer relocation packages for skilled recruits
Outsource

24. Loss of key skills

Use employee incentive or bonus schemes
Check pay reflects industry (going rate)
Identify top performers and reward/offer incentives to stay
Remove hygiene factors e.g. poor parking, lack of flexible working

25. Loss of political support

Identify risks ask, "How can political actors or conditions impact our business?"
Diversify sources of materials, suppliers, site locations, markets
Influence the political landscape via lobbying, networking, assisting candidates/parties
Agreed fixed rates, prices. Hedge against price volatility.

26. Machinery failure

Follow recommended servicing and maintenance schedules
Keep stock of parts
Have contract with emergency/24/7 repair services
Train employees on safe use, maintenance and basic repair

27. Market acceptance

Make use of early adopters to refine the product
Ask your existing customer base what they want/need
Invest in beta testing
Shadow test - open product for pre-ordering

28. Market changes e.g. movements in stock prices, interest rates, commodity prices.

Investment risk models
Use value at risk in measuring portfolio risk
Monte Carlo simulation
Sensitivity and scenario risk measures

29. Natural disaster

Identify natural hazards
Measure vulnerability to natural hazards
Connect to early warning systems if required
Use forecasts to measure proximity of risk e.g. use weather forecast to decide date for shipment
Create plans for responding to natural disasters
Insure against losses were possible

30. New markets - distract or provide opportunity

Conduct due diligence
Identify new stakeholders
Identify challenges e.g. curroption/lack transparency in new emerging markets
Use shadow testing and beta testing to reduce exposure and test acceptance in the new market

31. Operational risk e.g. risk to day-to-day operations

Used recognised Operational Risk Management (ORM) process
Assess risks for each operational area e.g. IT, HR, finance, security
Automate operational workflows
Use risk-based capital
Improve people management
Additional training
Invest in infrastructure

32. Patent theft/infringement - of your patents or competitor claim against your business

Implement process to respond to patent notice letters, patent assertions and lawsuits
Budget for patent defense expenses
Develop standing litigation teams inhouse and outside
Join Patent Pool
Use Rational Patent Exchange (RPX) Corporation

33. Poor management

Review recruitment processes - employ great managers
Don't use promotion to a management role as reward for long service
Invest in training for your managers
Have open transparent process for raising grievances, whistleblowing

34. Political instability e.g. coup, or political unrest

Take out Political Risk Insurance (PIR)
Assess risk in the country, use consultants or government advice e.g. U.S. Department of State's background notes
Negotiate compensation terms with a country before locating there
Create contingency plans
Diversify overseas investments

35. Profit - loss of profit or missing profit projections

Ensure realistic forecasting and sales pipeline. Understand what % of opportunities won't win.
Improve quality of leads, before handing opportunities to sales
Adjust sales pipeline multiplier
Prevent orders being shipped without payments clearing in advance
Have revenue incentives for suppliers who meet targets
Increase sales quotas
Reduce costs e.g. downsize office space by moving to hot desking or consider outsourcing some functions

Keep reading for a free download of the Top 50 Business Risks!

36. Recession

Undertake operational savings initiatives with a strong ROI
Prioritise initiatives that enable high value customers to be identified and retained
Take out key person insurance in case of redundancy
Revise decision making processes to make them more nimble and faster
Freeze recruitment i.e. don't replace leavers
Review supplier list check that alternatives are available

37. Regulatory compliance - difficulty in compliance or failure to comply

Invest in compliance consultants
Train employees on regulations e.g. GDPR
Use analytics and technology monitor compliance activities
Conduct a compliance risk assessment

38. Reputation - negatively impacted

Reputational risk occurs when performance doesn't match expectations. Track evolving stakeholder expectations to manage the risk
Put a plan in place to manage a reputation crisis
Monitor sentiment online using social media monitoring tools, engage promptly

39. Revenue forecast missed

Use variance analysis and comparisons to highlight potential inaccuracies in forecasts
Set high, low and expected forecasts (30, 50 and 70 percent probabilities)
Measure forecasts against actual results to improve accuracy
Update forecasts regularly e.g. monthly

40. Seasonal risk

Consider a complete shutdown during off-peak periods to reduce costs
Adapt your services/product to the seasons e.g. skiing in winter, walking in summer
Market in off-peak times
Reduce opening times during off-peak periods

41. Staff sickness/absence

Provide medical insurance with a well-being program/incentives
Log sickness, and trigger sickness absence procedures after x days
Separate sick pay from annual leave so that it can be tracked
Have a fit for purpose sickness absence policy

42. Supply chain failure/delays

Know the location of your suppliers and their suppliers facilities
Meet with your suppliers and understand their rerouting procedures and risk management procedures
Check your suppliers are compliant with local regulations
Diversify your approved suppliers

43. Technology - advances provide opportunity or threaten existing products

Outsource and/or use Software as a Service
Continuously review the market and technological advances
Invest in new technology companies e.g. buy shares, acquire the company
Invest in Research and Development team
Beta test new technology

44. Technology breakdown e.g. server outage

Build in redundancy and use data back ups
Use SaaS model to reduce onsite hardware
Have power and cooling back ups e.g. generators
Invest in monitoring and early warning systems

45. Theft - of product, information from shop floor

Invest in security hardware and personnel
Invest in cyber security, encryption, VPN etc
Retail style alarms on products
Strict access control, badges, scanners, search etc

46. Time-to-market

Integrate innovation into your business
Assign revenue goals for the R and D/ innovation team
Cultivate pilot ready customers or market segments
Automate the development process

47. Transportation delay or damage

Purchase Marine Insurance which covers sear or air transit
Chose a suitable freight forwarder
Understand value of shipments, split high value shipments
Be clear on the impact of losses in the supply chain on corporate financials

48. Under-resourcing

Have a contract with a temp agency for HR resources needed over peak periods
Outsource provision of human resources e.g. Amazon warehouse model
Set expectations with customers and stakeholders around lead times
Invest in automation and AI to free up resource from repetitive time-consuming work

49. Unexpected demand - supply issues

Keep some inventory (stockpile)
Diversify supply chain
Adjust supply for seasonal fluctuations e.g. holiday periods.

50. War - military conflicts

Diversify locations
Have data and warehouse backups in different locations
Insure against war, terrorism and political violence

Download the full list of Business Risks

Word download - The Top 50 Business Risks (Word)

PDF download - The Top 50 Business Risks (PDF)

20 Common Project Risks - example Risk Register

Checklist of 30 Construction Risks

Overall Project Risk Assessment Template

Simple Risk Register - Excel template

Business Risk - references and further reading

Baker, S and K. (2000). The Complete Idiot's Guide to Project Management, alpha books.

F. O'Connell, (2004). Simply Brilliant: The Competitive Advantage of Common Sense, Prentice Hall

Office of Government Commerce, (2009). Managing Successful Projects with PRINCE2, London: TSO.

envato tuts+. The Main Types of Business Risk [online] Accessible at: https://business.tutsplus.com/tutorials/the-main-types-of-business-risk--cms-22693