Who doesn’t want to protect their new business from risk, or do their best to reduce it? High risk usually involves higher costs, which can in turn impact your bottom line and growth.
Of course, there aren’t any magic tricks that will allow you to anticipate all possible problems and reduce risk to 0% – risk will always be present. However, there are things you can do to limit risks to your business, and by extension, lower potential costs.
In this article, we take a look at 5 easy but impactful ways to reduce risk for new businesses. Let’s dive in!
Reduce liability and set your ground rules
To begin with, one significant thing you can do to protect your business is to implement clear, legally-binding documents like Terms and Conditions.
Terms and Conditions are an absolute must for e-commerce businesses, and a widely-recommended standard practice for any company that wants to limit business liability and therefore risk.
Terms are an established way to limit your liabilities. Making sure that undue responsibility – and by extension costs – do not fall on you in case of malfunctions or misuse of your products or services, inaccuracies in website description, or harm incurred while using your services.
In the case of e-commerce businesses, Terms contain legally-required information related to conditions of sale, methods of payment, shipping, delivery, cancellation and more.
With Terms and Conditions in place on your website, it’s easier to handle problems arising or even preventing them in the first place.
This free Terms and Conditions template is a great starting point for setting up proper Terms to protect your business.
Employ technology and security best practices from the start
Technology’s rapid growth does not only come with upsides: it brings increased risks, making it crucial for businesses of all sizes to invest in security, as well as top-notch tech solutions. It’s now essential for startups to keep reinventing themselves to adapt to changes in the industry.
Outsourcing security to experts by using robust technology or industry-specific services is a cost-effective way to ensure strong protection. They can take care of technical processes like encryption to secure data, firewalls to control traffic and access controls to limit unauthorized access.
This can then help prevent incidents like data breaches, which typically involve significant financial and reputational damage, to individuals first, and businesses alike. They are even more disastrous when sensitive information such as payment details are affected.
Another effortless thing you can do to limit technological risk is to regularly update software and platforms you rely on, right when such updates become available. Regular software updates often contain patches or fixes for vulnerabilities, and staying on top of these is a fundamental part of building a secure environment.
Minimize data compliance risks
Let’s first give a bit of context here. In the past years, user data has become invaluable and as a result extensively used by businesses. In an effort to regulate data activities as well as preserve consumers’ rights and control over their own data, countries have adopted laws that companies must comply with. You’ve heard of the GDPR (introduced in 2018) which set the tone for a series of new data privacy laws around the world.
In general, it’s still quite the legal and technical challenge for small companies to get compliant. But it doesn’t have to be. Handling compliance risks is an easy one to address when you know what to look for. If you don’t, not knowing the law and not complying properly can not only lead to damage to your reputation, but audits and fines.
Lately, data protection authorities in Europe and the US have been very active and have sanctioned a number of companies for non-compliance. Some well-known examples include Meta and Clearview AI in Europe, and Sephora in the US. But don’t be fooled, DPAs issue major fines to lesser known companies as well.
If you’re not sure which laws apply to you, there are free tools like this one that can help you figure it out.
Train your staff on internal processes
Employees are a central piece of the puzzle when it comes to risk management in a company.
Raising awareness through training programs equip your workforce with the knowledge they need to recognize potential threats and vulnerabilities such as phishing attempts or malware. They learn the importance of security measures and how their actions can have a major impact on the organization’s overall success.
When it comes to the above-mentioned challenge of data protection, a useful thing to do is to write down who in your company has access to individuals’ personal data.
Mapping personal data access allows you to define accountability and permission, so that employees only have access to information necessary for their roles, thereby minimizing the risk of internal breaches or accidental leaks.
Other internal processes like password security are paramount. Training employees in robust password management, including the creation of complex passwords, multi-factor authentication, regular changes, adds an extra layer of defense for securing access points and reducing vulnerabilities.
Use a password manager
Remembering a unique and strong password for each application is a daunting task. Many employees resort to easily guessable passwords or reusing the same one across multiple platforms. Password managers address this issue by securely storing complex and unique passwords for each site or application, ensuring that your employees don’t take shortcuts that compromise security.
By promoting the use of stronger and diverse passwords, you can effectively reduce the risk of unauthorized access due to weak or repeated passwords.
A password manager is a software tool, usually subscription-based, that stores and manages a user’s passwords for various online accounts in a secure and encrypted database. Instead of having to remember multiple complex passwords for different accounts, users only need to remember a single, strong master password to access their password manager.
Given the fact that investing in a password manager is typically cheap and easy-to-implement, benefits are a no-brainer for finding an effective way to boost security.
Starting a new business is an exciting yet challenging journey, filled with risks that may impact your growth and bottom line. However, as we’ve seen above, there are practical and simple measures that can be taken to significantly mitigate business risk.
Having documents like Terms and Conditions and robust technology in place are equally essential in protecting your interests. Investing in quality security solutions like a password manager is a must, but even easy maintenance like making sure software is updated will greatly minimize vulnerabilities.
Lastly, don’t underestimate the human factor. Mapping out who has access to sensitive data as well as training and empowering employees to recognize and avoid threats are crucial to a well-rounded risk management strategy. By fostering a proactive security culture within your workforce, you can position your business to succeed even in the face of unforeseeable risks.
Remember, risk will always be a part of the business landscape, but with the right strategies in place, it can be managed and controlled. It’s not just about averting disasters, but employing strategies that allow you to build a resilient business, prepared to thrive in a challenging environment.