There are several challenges that businesses have to deal with in the modern world. While others are apparent, such as competition and financial constraints, some are invisible and require proper planning. These hidden risks can easily jeopardize a company’s success if left unchecked.
Invisible risks are subtle, intangible and often hard to quantify correctly. They stem from cybersecurity, compliance issues, operational inefficiencies, and reputable damages. These challenges have become even more prevalent and difficult to contain as businesses rely on technology and global networks.
This article will discuss invisible risks and the best way to protect your business.
Common Types of Invisible Risks
Invisible risks come in various forms and types, such as the following:
Cybersecurity Risks
Cyber threats are among today’s most significant security challenges. Hackers target company information, personal data, and finances. They use several sophisticated methods to breach security protocols and intercept such data.
Some common cybersecurity threats include ransomware attacks, phishing, insider threats, and distributed denial of service (DDoS). These attacks can lead to reputational damage, legal penalties and financial losses.
Operational Inefficiencies
Operational inefficacies can stem from several factors, such as poorly managed supply chains leading to delays or increased costs, outdated technology slowing down operations, and a lack of employee training, communication, and collaboration leading to poor productivity.
Legal and Regulatory Non-Compliance
Laws and regulations governing different industries are constantly changing. However, many businesses fail to keep up with these changes and find themselves with non-compliance cases. Staying compliant can be challenging, but failing can result in fines, lawsuits, or even business closure.
Financial Errors
Internal fraud and accounting mistakes can be overlooked but have devastating effects on the business’s bottom line. Issues such as embezzlement of funds by employees, lack of oversight in expense management and errors in financial reporting can lead to investor mistrust and tax penalties.
Risk Assessment Strategies
While the risks mentioned above are invisible, there are several strategies you can employ to control the impact of these risks. They include:
Working With Managed IT Services From the Start
Managed IT services provide the tools and expertise to deal with invisible risks such as cybersecurity and operational inefficiency. Their services are designed to simplify and secure IT infrastructure. You can get services such as network management that ensure your company’s network is stable and efficient and supports daily operations.
Additionally, they offer data management services. These include data backup and recovery, encryption, redundancies, and failover systems. These services ensure your business data are securely stored and available whenever needed.
With expertise and top tech tools at your service, you can optimize business operations and reduce cases of data breaches. You can learn more about how managed businesses can boost your business by understanding their services and how they fit into your plan and goals.
Conduct Risk Audits
A risk audit provides a structured approach to pinpoint vulnerabilities and assess their potential impact. The first step in an audit is where you inventory your assets, identifying everything critical to your business assets. This includes human resources, infrastructure, data, and brand reputation. For example, the customer database is more important than office furniture, so it should be given priority.
Next, you need to analyze potential threats to each asset. In this step, you need to identify both internal and external threats. You can also use case studies to identify risks that may not be immediately obvious. Then, map each threat to the assets it could potentially harm. For example, a cyberattack could compromise customer data, while a supply chain failure could impact inventory levels.
Finally, assess the impact and likelihood of each threat. The impact could be financial loss, operational downtime, and legal consequences. Evaluate the probability of each threat and categorize them using a risk matrix with likelihood on the Y-axis and impact on the X-axis. Then, start with the most likely to occur and have the highest impact.
Use Technology for Risk Reduction
Technology plays a crucial role in businesses and can be used to reduce invisible risks. You can monitor potential threats, analyze patterns, and respond proactively to these threats.
One crucial technology used in risk management is artificial intelligence (AI). It can perform predictive analytics by analyzing vast amounts of data and identifying patterns and trends that could be potential threats to your business. Machine learning algorithms can also flag unusual transactions or patterns indicating internal or external fraud.
You can also use risk management software that centralizes all risk-related data in one dashboard. This makes it more convenient to track and manage them. They also come with real-time alerts for emerging threats or suspicious activities so that you can respond much faster.
Data analytics can also identify irregular operations, such as unexpected dips in performance or unusual customer behaviour. These insights can be used to determine where your businesses are failing so that you can improve on that front. For example, low conversion rates in your business could indicate poor business reviews or customer service. Therefore, you can use this metric to gauge your wrongdoings.
Improve Your Cybersecurity Posture
Cybercrime is one of the most devastating risks businesses face in this tech-centred era. Statistics show that over 300,000 new pieces of malware are created every day. These threats target personal information, business finance, and operations. Without a strong security posture, a business could easily fall victim to these attacks, leading to legal fines and a loss of trust among customers.
Start by implementing a strong password policy to guide your team members in creating and using passwords. For instance, a good password should be more than 12 characters long and contain a mixture of numbers, symbols, and letters. Additionally, passwords should not be reused.
Additionally, you should enforce access controls based on employee roles or tasks. This helps limit those who can access sensitive data. For instance, if an employee is handling a customer case, only they will have access to the customer database for a specified period before it’s revoked. This will ensure if data is leaked, there’s an audit trail of who had access and when.
Focus on updating your systems and applications. As threats evolve, so should your defence against them. Updated software and systems have the latest security patches that can comprehensively prevent attacks. But these updates secure your systems against threats and enhance performance and usability.
Involve Key Stakeholders
Managing invisible risks requires collaboration across all levels in your organization. This gives you a comprehensive approach to identifying and containing any threat, as everyone is involved and working towards a common goal.
First, start with employees. Train them on recognizing and responding to potential risks, such as phishing attempts or policy violations. Ensure they also understand your business goals so that whatever action they take helps meet them and reduce risks. Second, encourage reporting by establishing a clear process for employees to report risks or concerns without fear of retaliation.
You should also engage leaders on aspects such as who takes ownership of risk management. There should be a well-laid structure that handles risk across the organization and prioritizes management every time. They could assign clear roles and responsibilities so everyone knows their roles. Finally, provide leaders with detailed reports of your risk posture so they can deliberate on what needs to be done.
Don’t forget external partners. Working with cybersecurity firms, legal advisors, or industry consultants can help address some of your complex issues. For example, if you’re facing non-compliance problems, working with legal advisors can help you meet the required regulatory standards and avoid cases such as licence revocation.
Set Up Financial Safeguards
Financial safeguards can help protect your business against any internal and external threats that could jeopardize it. Implement internal controls, such as checks and balances, for all financial transactions to reduce the risk of fraud.
You should also perform internal audits on your accounts and expenses. Any expense the company pays should be accurately accounted for and documented, no matter how small. This helps reduce money lost on unnecessary purchases by employees, which eventually add up to huge sums.
You can also use accounting software to automate routine tasks like invoicing and expense tracking to minimize human error and improve efficiency. This software can also quickly generate customized financial reports for auditing purposes, which helps identify if money is being lost.
Build Reputational Resilience
Your brand reputation is what holds your business afloat among customers. Recent studies found that 58% of adults in the US said brand reputation is essential when purchasing. Therefore, your company should protect your brand against reputational damage.
Start by providing exceptional customer service, as they’ll be the ones to offer first-hand reviews of your businesses. Ensure you respond to customer inquiries on time, guarantee their online safety when interacting with your website, and ensure your services or products are high quality and meet customers’ expectations.
If your main business point is a website, ensure it’s designed with user-friendliness in mind. Customers should be able to navigate pages easily, find all the information they need, and checkout easily. Customers will perceive your business positively if your website has an easy-to-use interface.
Furthermore, gather and respond to feedback. Customer feedback is an excellent way to know how they value your business. Showcase them on your website and social media pages. Respond to them professionally, acknowledging the positive ones and promising to improve if there are negative comments.
Conclusion
Invisible risks can be detrimental to any business as they are challenging to identify, quantify the extent of the damage, and resolve. They require continuous monitoring and evaluation to ensure they don’t damage your business. As mentioned in this article, you should first identify some common mistakes you face and then create frameworks to protect your business against them.