No businesses, not even the very smallest ones, operate without risk. Good businesses, though, operate with safeguards in place to minimize the potential negative impacts of any risks. This process is known as risk management. Even if you have an in-house HR team, you could benefit from partnering with a PEO to handle your risk management.
Risk management is the development of plans to anticipate and mitigate all kinds of potential adverse events. These events could be as commonplace as an employee tripping over an exposed electrical cord and injuring themselves. They could also be as complex as your business facing a class-action lawsuit for repeated wrongs against a large number of consumers.
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Risk management cover all aspects of an organization, not just employee safety. For instance, you may need to manage IT-related or financial risks. Once you’ve identified the risks, the process entails finding ways to reduce their chances of happening and coming up with strategies for what to do if one of these issues does occur.
Risk management is all work a company does to predict adverse events and minimize their consequences.
Risk management prepares your company to handle virtually any challenge that might come your way. It both prepares your business to identify risks when they arise and establishes plans for addressing these risks. As a result, you’ll likely make better decisions when you’re under the stress that risks introduce.
Even if you can’t think of many risks to your business, risk management can be a conduit to growth. Since the process requires implementing plans to address all kinds of unpredictable matters, it prepares your business to handle all events that could hinder your growth. With such preparation, your team can more easily solve problems and get back to growing the business.
Risk management has leadership ramifications too. In times of crisis, employees often turn to supervisors and business owners for guidance, but without risk management structures in place, you all may be at a loss. How can you address a problem that you never considered could arise? With proper risk management, you’ll rarely have to ask this question – your plans will be in place before the problem manifests.
As you can probably tell by now, risk management is as necessary as it is ambiguous. The sheer volume of unanswered questions that accompany risk management could even deter you from managing your risks in the first place. The good news is that you don’t need to do it alone – a professional employer organization (PEO) can help.
The best PEOs are experts in almost every imaginable small business risk. They use their expertise to manage risks such as the following:
PEO risk management is perhaps most strongly associated with workplace safety. That’s because PEOs can perform these services, among others:
As HR companies, PEOs often have a drug testing infrastructure. Although employee drug testing is increasingly a legally murky area, PEOs thoroughly understand what types of testing are and aren’t legal, given their deep knowledge of business risks. Legally compliant testing can reduce the chances of employees working under the influence and making costly mistakes.
Hiring an employee who turns out to be a poor fit can cost you hundreds of thousands of dollars. PEOs can help you manage this risk. Your PEO can advise you on what to include in your job listings to weed out bad hires. It can also guide your firing processes to minimize your unemployment tax obligations and the chances of wrongful termination lawsuits.
Some PEOs can walk you through security system implementation to reduce the chances that your employees will steal from you or use company property for personal needs. This aspect of risk management may involve monitoring areas of concern or installing access control technology. It may also involve cybersecurity measures, though this risk management feature is less common with PEOs.
PEO risk management can offer a wide range of benefits for your company.