If you’re an entrepreneur and focused on growing your company, one would presume that you’ve done an operational risk assessment.
Such an assessment takes into account more than just expenses or revenue. It includes the set of business assumptions you have made, from your expected market placement among your competitors, to whether your expenses will exceed your revenue for some period of time while you are building a customer base, to how or when you will fill “key man” roles as you grow.
A risk assessment also includes a vulnerability assessment that identifies, in detail, the critical impacts that could derail your business, from people, to poor business processes, to systems failures, to natural disasters. It includes policies and standards developed so that your new team will have a clear code of conduct and so that an authentic brand can be created.
How much risk can you afford to take? How long do you project that your company can last without additional outside capital investments? Does your planning assume that you will eventually sell the company? Or maybe pass it along to members of your family? Or will you close it down in an orderly fashion after some specified period of time?
Particularly when an individual, or a couple rather than a consortium of owners, starts a business, make sure that operations are not dependent upon a single person. From the outset, you should create plan to handle the situation in which the CEO is unexpectedly unable to work.
What will happen if the CEO is gone? Is there a second-in-command? If not, your hiring process for key positions will look slightly different because you will be planning to develop a successor through training and experience rather than having one already part of the executive team.
Accurately assessing your potential risk involves a lot of moving parts. Quantities of patience and flexibility cannot be underestimated over the long haul.
Annie Searle
Searle is an Associate Teaching Professor Emeritus at the University of Washington. She is founder and principal of ASA Risk Consultants, a Seattle-based advisory firm. She spent 10 years at Washington Mutual Bank, most of them as a senior executive. Annie is a member of the CISA 10 Regional Infrastructure Security Group. She was an inaugural inductee in 2011 into the Hall of Fame for the International Network of Women in Homeland Security and Emergency Management. She writes a column monthly for ASA News & Notes and is the author of several books or book chapters. She is also a member of the emeritus board of directors for the Seattle Public Library Foundation.