ny business decisions are not only governed by what business owners know through experience, but are often made based on risks involved, or whether a decision is in line or goes against compliance regulations for their industry. Risks are something that have to be weighed up to determine what the best course of action might be, and compliance is essential in regards to protecting workers and the general public, as well as operating a business in an ethical manner.
Is basing business decisions on risk and compliance a good idea or not? Let’s dig a little deeper and find out.
Risk Can Play a Huge Role In Good and Bad Decisions
Risk exists everywhere with everything we do. It’s just a part of life. Each time we drive a car, we’re taking a risk, and as we’re driving, we are constantly making small decisions along the journey. Generally, these decisions get us safely from point A to point B. Occasionally, a driver may get it wrong, leading to potentially catastrophic results.
The business environment is no different when it comes to dealing with risks. While each business varies, risks are a constant element of every enterprise. No one has a crystal ball that tells them the future or the outcome of a decision, so often it’s more of an educated guess based on what we already know, with a little bit of hope that we’re going in the right direction.
All businesses should be aware of any type of risk associated with their industry and operation. These risks should be recorded in a risk management plan, with risks prioritised by their likelihood of occurring and how much of an impact it would have on the business.
Once business owners are aware of the risks, it’s then possible to start making business decisions with those risks in mind.
Not all risks in the business world are about things like workplace accidents or safety. Many risks are money-related. Just as you risk money when going to the casino, for example, a business decision could prove profitable, or it could potentially lose the business money.
What it comes down to is pros and cons, risk versus reward. Business owners and managers need to determine, to the best of their ability, what the potential outcomes could be and make a decision based on those outcomes.
If the risk outweighs the reward, then the decision to take a certain action should be no. On the opposite side of the scale, if the rewards are potentially lucrative and the risk minimal, then it makes more sense to take a chance and see how it plays out.
Business decisions can only be made in this way, however, if the element of risk attached is known. Otherwise, owners and managers are simply making their decisions blindly.
Making Decisions Based On Compliance Regulations
When it comes to making business decisions based on compliance, it’s not really a matter of weighing up risk versus reward, as your business should remain compliant with the rules and regulations that govern it at all times.
In the case of compliance, making decisions will be determined on whether the choice is in line with compliance laws or goes against them. Sure, you could take a risk and go against the law, but the outcome could prove catastrophic in one form or another. The decision could lead to an accident or injury, or your business being fined for breaching the rules.
In order to remain compliant while making decisions, you must first be fully aware of what the rules are that govern your chosen industry. Everyone in your organisation needs to be aware of the rules and regulations.
One way to achieve this is to hire a professional compliance manager as part of your compliance management solutions. Arm your compliance manager with dedicated software that monitors both risk and compliance in the workplace, and you can rest easy knowing that your operation is in good hands. Software monitors and analyses your business, as well as making it easy to remain compliant and report any workplace incidents if they do occur.
Making good business decisions is all about making wise and educated choices. Be aware of the risks, weigh up the risks versus reward, and ensure your business operations are always in line with the law.