Several different functions make a business run smoothly, from marketing to legal oversight. Leaders don’t have to be experts at everything, but they typically pay attention to what’s going on in each area. Whether it’s a new risk management program or product launch, focusing on the critical details can help avert a crisis. Dealing with the fallout from missteps doesn’t exactly add to a company’s reputation — at least not in the desired way.
While most employees don’t try to make major mistakes, the chances increase when companies don’t establish guardrails. Every functional area has challenges that create opportunities for building better safety nets. But leaders can’t get there without closer scrutiny of the most pressing potential threats. Like other owners, you’re probably concerned about what parts of your business you should focus on now. We’ll examine four below.
1. Risk Management Programs
The idea behind risk management programs is to reduce threats through appropriate strategies. You transfer the risk of damage to your company’s fleet vehicles to an insurance policy. Simultaneously, you might install security cameras in areas where theft is most likely to occur to prevent it. Many companies create redundant locations for document retention to spread the threat of loss.
While these can be effective approaches, they tend to isolate the responsibilities for each activity. Furthermore, risk management remains separate from governance and compliance programs. Governance and compliance are directly related to possible threats, whether they’re from inside or outside the organization.
Deceptive advertising practices, for instance, can land a business in hot water with government agencies like the federal trade commission. But it could happen because marketing employees are unaware of what correctly substantiates specific claims. Say an ad uses customer testimonials to back up a product’s weight-loss statements. Without clinical, scientific proof, these statements should not become a part of the advertising.
Governance, risk, and compliance programs, also known as GRC, can help correct these errors before they cause bigger problems. With GRC tools, leaders assess what systemic risks exist. Perhaps tighter ad approval controls and employee training courses will guard against compliance-related advertising mistakes. Or, the assistance of an ad agency might be necessary to alleviate busy staff. Either way, integrated programs expose easy-to-miss vulnerabilities.
2. Disaster Recovery
The World Meteorological Organization reports natural disasters over the past 50 years have led to $202 million in daily losses. Not all of these hazards happen in the United States. Still, an increase in the strength of storms heightens operational risks for businesses. Your resources could take a hit if your facilities are in a storm’s path.
Without disaster recovery planning, your business could fold. In some industries, customers may understand services won’t be available for a while. But in others, such as telecommunications, clients are less likely to be as forgiving. They depend on these critical services and will happily switch to another company with working facilities. Once the disaster’s over, it’ll be difficult to get those customers back.
Yet, it doesn’t always take a superstorm to cripple a business’s ability to deliver. Preparing for cyberattacks and other disruptions is part of a solid disaster recovery plan. For instance, you might need to upgrade your company’s technology. It may serve as the backbone of your infrastructure, which is responsible for providing essential offerings.
Imagine if those improvements don’t go off without a hitch. Perhaps there’s a glitch in how the new systems sync with existing ones. Maybe the equipment fails, or the vendor you’ve hired doesn’t meet expected milestones. Testing, creating redundancy, and contingency planning may keep operations running until you fix the root causes of failure. Meanwhile, your customers won’t notice any service-level differences.
3. Client Experiences
It’s hard enough to win over prospects. Giving them reasons to leave after they become customers isn’t just bad business. Tales of poor client experiences get around, preventing new leads from converting and previous customers from coming back. Customer service research from 2021 shows 83% of consumers will switch because of an unsatisfactory experience.
Poor encounters aren’t limited to indifferent support staff. Conflicting information, a lack of self-service options, and slow response times contribute to the problem. More than ever, clients want prompt solutions to their dilemmas. Some of these issues may correlate with product education opportunities, while others tie into company-initiated changes.
Say your business decides to migrate client accounts to a new system. This means your customers will need temporary passwords to access their information. They’ll also have to set up new credentials once they’re in. However, something goes awry during the migration process, preventing the current software from accepting the temporary passwords you sent.
This scenario is frustrating, but it’s more acceptable if clients receive an immediate workaround through self-service or a support rep. But what if customers attempt to reset their passwords and those don’t work either? Support reps can’t offer solutions, making the company seem indifferent to clients’ growing frustrations. Putting measures in place to empower service employees to resolve potential failures ensures better customer experiences.
4. Organizational Culture
Your company’s culture may be a complex area to address. Nevertheless, it sets the tone for nearly everything your business does. High-pressure cultures where the end justifies the means may be especially problematic. Unrealistic performance demands could lead to unethical behaviors, damaging reputations in the long run.
Take financial organizations where employees open fake accounts without customers’ knowledge. They do it to make the numbers. While it’s good to have sales goals, impractical ones lead to anxiety in staff members. They’re more worried about being fired or penalized financially for not meeting leadership’s expectations. Consequently, they may feel compelled to do whatever it takes to survive.
In addition, staff members might witness their peers engaging in these behaviors. If management tolerates it, a culture of dishonesty is likely to set in. While the company may realize short-term gains, customers won’t be pleased once they discover the deception. Neither will government agencies that regulate fair and honest business practices.
Focusing on what behaviors a culture promotes starts with a company’s founders. It’s up to current leadership to see it through by spotting deviations from a business’s core values. This might mean correcting process gaps, miscommunications, and “bad apples” among employees. Aligning performance expectations with realistic achievements can also support ethical behavior.
Business Areas in Need of Attention
Various moving parts go into running a business, each demanding a portion of an owner’s attention. While trying to meet competing demands, leaders may find themselves stretched too thin. Without priorities, it’s easier to overlook possible threats. By focusing on the areas most likely to contain harmful risks, you can effectively manage them through mitigation strategies.