Common Business Risks

Today’s post is by Randy Russon, founder of TOPCFOS

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In today’s world there are many common business risks that every business faces. I want to list the following business risks, then talk about each one of them.

  • Increased Competition
  • Customer Lawsuits
  • Data Breach
  • Employee Theft

One of the most common risks in business is increased competition. You might be the only gas station in town to start with, but what if new gas stations open up near you to take away your business? What do you do to overcome this business risk? Competition always brings out the best in everyone, so when there are more competitors to deal with this means you have to be that much better to win customers. However, there are some markets where too many competitors can actually drive a weaker competitor out of business. In business, only the strong survive and survival of the fittest is the rule. The next common risk in business are customer lawsuits.

Customer lawsuits can come from many different directions. Slip and fall accidents are common with brick and mortar stores. So, in the wintertime when ice and snow are present, businesses need to make sure that walkways are free of ice and snow. Manufactures who sell manufactured goods need to produce owner’s manuals that give customers all the safety precautions they need to protect the manufacturer from liability. In recent times data breach has become a common business risk.

Last year, both Target and Home Depot experienced data breaches which affected several million cards of their customers. When I read this story I wondered why and how this could have happened. Was this a preventable data breach? Was it simply someone being asleep at the wheel? Business owners need to do everything in their power to prevent any kind of data breach, because data breaches negatively affects customer relationships. Employee theft is also a common business risk that business owners face.

This is so ironic, but a common area of employee theft often occurs within the accounting department of an organization. In their book, “Executive Roadmap to Fraud Prevention and Internal Control” by authors Biegelman and Bartow, they share with the reader Dr. Donald Cressey’s Fraud Triangle. Dr. Cressey’s Fraud Triangle is made up of three legs – opportunity, motive and rationalization. The employer has control over the opportunity leg of the triangle. If the employer will remove this leg, the chances for fraud to occur are much less. In this article, we have only scratched the surface of the many common risks there are in business.

We hope you’ve enjoyed our Blog today. Please remember, TOP CFOS offers the finest CFO services to companies anywhere in the world and would love to be a part of your team. Feel free to reach out to us anytime. Your feedback is most welcome, and we invite you to share this post with friends and associates. During the month of August, we are offering a free service to our readers. We will help you set up your COA (Chart of Accounts) according to GAAP, all at no charge. Our contact information can easily be found here on our website, so give us a call today! Our next post will come from the Customer Service category on our website and is entitled What is great Customer Service? And, thank you for joining us!