Managing risk in a turbulent landscape. What should business owners consider?

Owning and running a business inevitably comes with risk. Whether it’s reputational, financial or operational.

In today’s environment, it can feel like there’s a new risk around every corner. But this isn’t necessarily a bad thing. With risk comes reward, and some of the risks we’re facing today could present genuine business opportunities.

With the turn of the year fast approaching and the Autumn Statement now having been revealed, it’s time to face those risks head on. You’ll need to proactively prepare to be able to do so with confidence.

Obviously risks will differ by region, industry and business, but we’ve outlined some of the most predominant risks and how to plan ahead of 2024.

Financial uncertainty

It’s no surprise that financial uncertainty has been named as the biggest risk that business owners are facing. With rising energy, interest, tax and inflation rates it’s a tough climate to say the least.

Whilst last week’s Autumn Statement focused on supporting business owners to grow and invest, the devil is in the detail. And the reality is that cash flow will always play on the mind of owner managers.

Flexing to this risk of financial uncertainty requires a mixture of strategic planning and adaptability. This could mean adjusting your price points, potentially opening up into new markets to secure new revenue streams or devising a new tax strategy.

It may seem obvious, but a simple way to stay ahead of the game is to really drill down into your forecasts and to create realistic budgets. Review these on a regular basis and build your reserves to use as a contingency. This will place you in a strong position to face any unexpected turns in the road.

Disruption in supply chains

The macro-environment is undoubtedly having an impact on supply chains. Brexit, the war in Ukraine, sanctions, political instability and natural disasters have all played their part.

If your supplier is based in a country prone to natural disasters which could wipe out or damage your source, where will you turn to? If sanctions are implemented to prevent trade with countries where there’s ongoing conflict, what will your next steps be?

Start creating contingency plans. A good jumping off point would be to look at your suppliers and diversify. This will ensure that you’re not relying solely on one source. Maybe it’s time to switch to local suppliers where possible. The benefits of doing so are twofold – not only are you supporting your local community, but you’re also reducing transportation risks, the administrative burdens and VAT implications following Brexit.

The threat of cyber-attacks

For the most part, digitalisation is a positive. Today’s technology allows business owners to streamline their organisations and improve efficiency, but it does inevitably bring risk too. We’ve seen Russian cyber-attacks on commercial internet users as the conflict in Ukraine continues, and cyber-attacks on businesses across the UK becoming more frequent too.

With more businesses owners using the cloud, comes more responsibility on them to secure their data.
So what steps can you take to mitigate the risk?

• Invest: Invest in multi-factor authentication. This extra layer of security makes it more difficult to gain access to your data.
• Train: Ensure that all of your team are aware of suspicious emails, phishing and other common signs of security breaches. Make sure there are clear steps in place for your team if there is a breach.
• Encrypt: Make sure your sensitive data and information is encrypted. This helps to lessen the risk of anyone gaining unauthorised access.

The rise of artificial intelligence (AI)

The debate around AI is predominant in every industry now. You could see it as a risk, and that’s natural. The speed at which AI can process data and make judgement calls can feel like a threat to service providers and employees. But you could also see AI as an opportunity.

If you upskill your people in AI, they can use the software to the advantage of your business. It can support them in time-consuming tasks allowing them to refocus their time and energy into strategy and adding value to your end-users.

If you do start to implement AI within your business, make sure you keep ethical considerations and regulations front of mind, always prioritising the privacy of others. Stay up to date on legal regulations with regards to AI and foster a culture of transparency, both internally and externally. By being clear on how you’re using AI, algorithms and storing data, you’ll help to build trust with your stakeholders.

Are you putting people first?

Looking after your stakeholders is always important, whether they are your consumers, clients or your current team.
As demographics change, so do preferences, needs and expectations. If your business doesn’t keep up with consumer behaviour and market trends, you run the risk of losing your competitive advantage.

When it comes to recruitment and retention you need to consider how skills shortages, competitive remuneration packages and comprehensive benefit offerings are putting more responsibility on employers too.

It's worth asking yourself:

• What makes you stand out in the marketplace – for prospective customers and talent?
• Do you need to adapt, improve or overhaul your offerings meet and exceed the needs of you stakeholders?
• Do you have the capacity to be able to do so? If not, now could be the right time to start recruiting and/or training.
  
  When was the last time you sought genuine and honest feedback from your stakeholders? If it was recently, have you listened and actioned any changes?

Helping you to plan ahead for 2024

Navigating all the risks at play can be daunting. In order to stay ahead and position yourself in the most robust position possible, it’s vital to start planning for all scenarios.

With the new year just around the corner, now is the perfect time to take stock and start looking forward. This is where working with an advisor can add real value.

Our team of experts will be able to draw upon their expertise and experience having worked with other businesses within your sector. They’ll provide an external pair of eyes to help you prepare for and mitigate any risks ahead.