Why every business needs to think about risk

After a fire ripped through four floors of its main warehouse last weekend, Asos’s future was genuinely hanging in the balance. Every single product which the firm ships is first checked at the central warehouse, so substantial damage threatened to derail the company’s entire operation.

The fire, which took 60 firefighters to deal with, destroyed 20 per cent of Asos’s stock, but fortunately the structure and technology of the distribution centre was saved. As a result the site resumed taking orders less than 3 days after the fire occurred.

But what if the fire had been more severe? Whilst the company was no doubt heavily insured against this kind of disaster, the business interruption which would have occurred if the warehouse was rendered unusable would have been catastrophic, especially for a company operating in a market with demanding customers.

What this illustrates is the need to plan for risk. In the event of a fire in your business’s premises, what would your contingency plan be? Is there an alternate location you would work from? Do you have stock which would need to be quickly replaced?

And risk is of course about more than just fire and similar disasters – other risks abound. Are you prepared for the eventuality that one of your key suppliers goes under, or the economy takes a nosedive? What would happen to your business if, god forbid, you went under a bus tomorrow?

This month at Real Business we will be taking a look at all things risk. As well as considering the key risks you could face and how to prepare for them, we’ll be asking questions like “Who should be responsible for planning for risk?” and “Do you need a risk register?”

To kick things off we take a look at 10 risks your business needs to prepare for 

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