December 21, 2022
Risk. It’s the stuff of nightmares, it’s the boogeyman of the business world, and it's the enemy of operations teams. From stuttering cash flow to data protection breaches, there are plenty of things to worry about in the day-to-day running of a business. But what can you do to impactfully shield a business from future risk? What foundations need to be in place to avoid calamity? And what strategic moves ensure a company is prepared for the worst? In this article, we count down our top 5 tips for avoiding risk in a business. So, what’s first?
Let’s start with one of the most important - but equally underrated - aspects of preventing risk: training. While accountability for risk will most likely sit with senior members of the team - whether that’s the board or a risk management team - it’s just not feasible to expect risk avoidance to be actioned by one individual. It’s important you invest the time and energy into training employees on what is, and isn’t okay in a business context. Let’s take a few examples.
Your sales team will be on the frontline, speaking to countless clients and prospects to keep cash flowing through the business. The nature of their work means they will be making new connections, securing new deals, and coming face to face with countless contracts. While you ultimately want a strong partnership between sales and legal - to ensure there are no nasty surprises - the reality is that according to the ELR Report, 65% of sales teams bypass legal to get work done. While sales teams do this to avoid any perceived “blockers” to a deal, the reality is that teams are exposing the business to risk, in the form of unfavourable terms. Here, it’s hugely important that you invest the time to train sales teams on the risks of entering into contracts without legal guidance. From prolonged payment terms to unlimited liability, there’s a lot that can go wrong. Eager to avoid risk in sales? Check out our report on bridging the distance between sales and legal teams.
Your marketing team will pull off some serious feats to get your business in front of the right people. From social media posts to email marketing, these people will be shouting from the rooftops about everything that you do. While that’s in your interest, it’s not in your interest if your marketing team does so without any understanding of the rules and restrictions that go hand-in-hand with this role.
From advertising rules related to influencers and paid posts, to the all-important email marketing rules that can trigger the attention of the ICO, it's crucial that your marketing team know what is, and isn’t, ok. There are restrictions on who you can market to, the types of assets you can use, disclosures that need to be made, and uses of data that need to be abided by. Let this team loose without training, and you may just run into issues. Unsure of where to start? Check out our guides for social media and email marketing.
Employees are one of your most valuable assets. They keep the wheels turning, fuel the future, and bring the business to life. However, with people, comes unpredictability. While it's the last thing you hope for - grievances will invariably come to light in a company’s lifecycle. You’re likely to face a few legal hurdles with your team, from sexual harassment to dealing with whistleblowers. So how do you mitigate the unpredictability of people? It's important that you train staff on what is, and isn’t expected of them. You need to make sure they’re aware of the standards of behaviours that are expected, the relevant company policies that would impact them, and the steps they can take to report any unwanted behaviour. Failure to do this can have huge consequences for the business, from legal issues to the loss of much-loved members of the team.
Depending on the nature of your business, you may have a number of valuable assets under your belt. From core products to unique trade marks, your intellectual property will be a particularly valuable asset. Not only will your IP set you apart in the market, but it will often have financial benefits for the business. But what happens when your intellectual property is infringed upon?
In the UK you have a series of intellectual property rights, however, to truly protect, leverage, and maximise the value of your assets, it’s crucial that you register those rights. Copycats are unfortunately rife, and without the right infrastructure in place, you may find your product on the market, under someone else’s name. To avoid financial loss, the dilution of your brand, or the encroaching of copycats, be sure to invest in your intellectual property early on. We promise you’ll thank yourself for it later on.
We don’t need to tell you: data protection is pretty important. And, getting it wrong, is risky business. In 2022 we saw the likes of Epic Games, WhatsApp and Meta fined millions for breaching data protection laws, and it’s clear to see that the ICO is showing no signs of slowing down. As a business, you’ll have a series of data protection obligations, from how you process data, to how you communicate what you do with that data. It’s your responsibility to abide by the rules set out by GPDR, PECR, and a whole load of other acronyms, and failure to do so can result in million-dollar fines. Yikes. When it comes to risks, this one is a double whammy, with reputational and financial risk on the horizon. Discover how we help you to ensure that your data protection strategy is above board.
In many respects, your contracts act as a shield against risk. However, without probing deeply into the systems you have in place, it can be difficult to know whether you’re actually protected - or just on borrowed time. If your contracts don’t stipulate against unlimited liability, your business may be exposed to enormous financial losses and damages. It’s crucial that you have your legal partner review and edit any and all contracts where liability would be an issue, such as software licenses or share purchase agreements. Don’t forget, this doesn’t just apply to your own contracts, it also includes the contracts that the business signs into. You want to be certain that your business has protections, such as indemnity clauses, to shield you from risk in certain scenarios. Discover more about indemnity clauses here.
From time to time, you’ll come into contact with high-risk customers. According to the FCA, high-risk customers can be grouped into three main categories:
These types of customers can be particularly risky for your business and can result in either non-payment or unknowingly being an accessory to money laundering activities. It’s important that you have systems in place that conduct sufficient due diligence on the types of companies you work with. Failure to do so can result in bigger consequences than just a few missed invoices.
Risk is an unfortunate reality in business. However, it’s not a reality you need to face alone. We work closely with companies to build foundations that are designed to shield a business from risk. From robust data protection strategies to legally airtight contracts, we make sure your business is covered as it wanders into unchartered lands. Discover what we do to protect businesses from risk.