Preparing for Global Risks: A Growing Priority for Small to Medium Companies

Preparing for Global Risks: A Growing Priority for Small to Medium Companies
June 11, 2020 seouser
global risks

Risk management policies help businesses to be prepared for both local and global crises. These policies look at potential threats to the business and how they can be either avoided or handled if they are unavoidable.

Considering our current pandemic, small to medium businesses are starting to pay more attention to risk management policies to help them weather future crises.

SMEs and global risks: A new risk management priority

The COVID-19 pandemic has made it clear that no business is immune to a crisis, especially when the risk is external or hard to predict. Smaller businesses that may have neglected risk management in the past need to make it a priority now and in the future.

A 2020 research study in SMEs and Global Risks noted that “to minimize the impacts, it is important that SMEs become more aware of global risks, as well as assess, monitor, and enhance their risk management and business continuity management capacities”.

With uncanny timing, the study was released in February 2020, when the pandemic was just becoming a global threat and countries were starting to observe nationwide shutdowns that have had such a heavy impact on SMEs.

Could risk management have helped SMEs prepare for the 2020 pandemic?

It’s not possible for businesses to be risk proof, especially when the threat is not only external but global. However, risk management helps businesses to identify the risks most likely to affect them and how they can mitigate the negative effects.

Risk management in the face of this global pandemic would have prepared small to medium businesses to weather the shutdowns with minimal profit loss and disruptions. While national shutdowns are rare, pandemics aren’t unprecedented.

Literature and studies warning of a potential global pandemic have been widely available for many years. Previous outbreaks of novel viruses such as SARS and MERS resulted in pandemic preparedness checklists being released by the CDC and articles like this one.

Top 10 global risks for small to medium companies

Pandemics aren’t the only risk that small to medium businesses should be prepared for. There are many other global threats that your business’ risk management policies should address.

These are the top ten global risks in terms of impact with examples. This is according to the 2019 World Economic Forum report:

  • Weapons of mass destruction (nuclear or hydrogen bombs)
  • Failure of climate change mitigation and adaptation (sea levels rising)
  • Extreme weather events (tropical storms or cyclones)
  • Water crises (extreme drought)
  • Natural disasters (earthquakes or tsunamis)
  • Biodiversity loss and ecosystem collapse (fish stocks, mangrove ecosystem collapse)
  • Cyber-attacks (hacking of critical or sensitive information)
  • Critical information infrastructure breakdown (internet, telecommunications breakdown)
  • Man-made environmental disasters (landslides or earthquakes due to mining and fracking)
  • Spread of infectious diseases (pandemics and epidemics)

The items in bold are also on the top ten list of global risks in terms of likelihood.

Post-pandemic risk management

Right now, most small to medium businesses will be focusing on survival, which is understandable. However, it’s not too late to identify the risks caused by the pandemic that affect your business the most. This will help with ongoing mitigation and recovery.

Identifying these risks now will also help you establish or adjust your risk management policies to future proof your business in the face of the most likely future global threats. The pandemic is already forcing SMEs to adapt and become more resilient by implementing WFH policies and web-based work processes and communication.

Global warming and environmental risks are predicted to increase in the near future. Once the pandemic has abated, all businesses, no matter their size, need to prioritize risk management otherwise complacency will result in a similar lack of preparedness when we face our next, inevitable global crisis.

isoTracker offers risk management software to streamline and simplify your risk management processes and procedures. Find out more about our centralized, cloud-based platform for risk management and our other quality management modules.

Get a free trial now