Being proactive in the area of risk management is the only way to truly future-proof your success or survival. An effective risk management plan has become a critical factor for the success of businesses. There are various risks which a business can face like market volatility, geopolitical crises, widespread economic changes, regulatory reforms, and generally ignored cyber threats!
To manage these risks effectively, there is a huge demand for skilled Risk Managers, who can navigate the organizations through all these risks and help them achieve their business goals. Here are a few tactics which an organization can adapt to systematically reduce the risk in a startup.
A. Voice the Red Flags
Empower the people in the company. Encourage them to raise their voice whenever necessary. Red flags indicate trouble! It can be in the process, with a client, amongst themselves or with a third party. Training your people to voice the red flags is imperative to addressing them early, so they don’t become problems that expose the company to real risks.
B. Hire a Compliance officer or adopt a compliance software
Complying with new statutes and taxes can be complex. It’s too risky of a proposal to go without a professional advisor. Getting an individual or software on board will help you focus on other areas of your business that need your attention, such as building revenues, marketing and customer service. VComply is one such software which can help you to integrate all your GRC related matters on one platform.
C. Keep a check on the cash burn
All great businesses have always been conservative and conscious of their cash flows. The vendor risk should be minimized. Cash expenditures should be minimized each month.
D. Have robust contract management
Clear documentation of contracts and policies will protect the company from contingencies.
E. UTILIZE the Lean methodology
We have read about lean in our previous article. Use it to validate the riskiest assumptions around your product concept. Most startups fail because they waste a lot of time and money building something that nobody wants. This way, you can validate or invalidate your idea in a matter of days and mitigate your risk immensely.
F. Focus on Down Payments
Payment terms go in favor of the bigger company, but this can create a major cashflow risk. Be firm about the payment policies. You get what you negotiate for!
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