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June 08, 2009

The Risky Business of Being in Business

The Risky Business of Being in Business

Jerry Kalish

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Summary

Part of being a business owner is managing risk. Some risk we can insure against, some we can’t. And in today’s economy, the risks are more

Part of being a business owner is managing risk. Some risk we can insure against, some we can’t. And in today’s economy, the risks are more complicated than ever before, and the ability to manage them can be the difference between success and failure.

But how do we measure and prioritize risks? A recent survey by Aon Corporation provides some insight. In October and November 2008, Aon worked with leading organizations around the world in more than 40 countries and across 31 industries to find out their views of emerging and escalating business risks, and the steps they are taking to address these challenges.

The results were published in Aon's 2009 Global Risk Management Survey report. The 551 respondents included in this report represent a broad range of industry sectors around the globe. 37% of them are privately-held companies.

Here are the top ten most pressing global risks according to the respondents:

1. Economic slowdown

2. Regulatory/legislative changes

3. Business interruption

4. Increasing competition

5. Commodity price risk

6. Damage to reputation

7. Cash flow/liquidity risk

8. Distribution or supply chain failure

9. Third-party liability

10. Failure to attract or retain top talent

Interestingly, risk to reputation was rated as the #1 risk in Aon’s 2007 Global Risk Management Survey. This year, it has dropped to #6. This decrease in rating, I am sure, is due in large part to the global economic slowdown.

But to many small business owners--including me--“damage to reputation” has a much higher priority than #6. We are the business, and whatever happens reflects directly on us. So while “cash flow/liquidity risk” might be #1 instead of #7 to many of us, “damage to reputation” might be a close #2.

But let’s think positive. The opposite of suffering damage to reputation is making yourself referable. Dan Sullivan, who runs the Strategic Coach program for enterpreneurs, in which I participated, says that in a world of unreliable people, the four referability habits will make you a prized resource. And what are they?

1. Show up on time

2. Do what you say you’re going to do

3. Finish what you start

4. Say please and thank you

Sounds simple, doesn’t it? But if it was, we’d have a lot more competition.


Jerry Kalish is founder and President of National Benefit Services, Inc., a Chicago-based employee benefit consulting and administrative firm that serves private-held companies, publicly traded companies, and public sector employers. He blogs at The Retirement Plan Blog and can be reached at jerry@nationalbenefit.com.


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