If your business has an operational risk management plan for your home country, it may only be a case of expanding this to include the additional risk you are exposed to as you begin to do business overseas. There are four key steps to adding to your existing operational risk management plan when growing your SME:
1. Identify risk
Review your expansion plans and identify any additional potential risk:
- If you are moving manufacturing overseas, does your new location suffer from weather events?
- Review any previous issues that have occurred in your home country.
- Are there additional risks to employee health and safety because of your expansion?
The question ‘what if’ is powerful when it comes to identifying potential issues:
- What if a key expat employee had to return from assignment early?
- What if your premises was flooded?
- What if stock was damaged?
- What if your systems were subject to cyber-attack?
2. Assess the risk
Work out the level of risk using the following formula:
Level of risk = likelihood x consequence
Give each potential risk a number that corresponds to both and work out those that are the greatest risk to your business. Do not forget to include potential controls you have in place to mitigate each risk. Controls include:
- Training
- Personal Protection Equipment
- Administrative Controls
- Engineering Controls
3. Manage the risk
Your business must then work out a plan to manage the risk through:
- Avoiding
- Reducing
- Transferring
- Accepting
As an SME, you may choose to avoid certain risks by changing your business practice. Reduce the probability of risks that cannot be avoided entirely, like data breaches by:
- Educating employees
- Complying with legislation
- Encrypting sensitive data
It may be possible to transfer some risk, for example SME international health insurance plans protect your business from medical costs should an expat employee become unwell on assignment. Finally, there may be some risk you will have to accept as part of your business.
4. Monitor and review
It is important to monitor, review and update your operational risk management plan regularly as your business and the world it operates in changes. Update it with additional challenges that may arise and remove those that may be eliminated by changes in technology.
Find more information on planning for SMEs in our post on developing an international value strategy for your SME.
