Managing your business is all about managing your risk.
Identify your risks and classify them appropriately in the quadrant of this graphic.
The quadrants are :
OFTEN, EXPENSIVE – Risk exposures that happen often and have a significant financial impact. These are the highest priority.
NOT OFTEN, EXPENSIVE – These risk exposures do not happen often, but still need to be addressed. This is your second highest priority.
OFTEN, NOT EXPENSIVE – Risk exposures that happen often, but are not a great financial burden. These are the third priority.
NOT OFTEN, NOT EXPENSIVE – Risk exposures that happen often, but have little financial impact. These must still be dealt with, but are the lowest priority.
Select a default risk or add your own in the green-shaded cells.
Copy the selected risk.
Paste the risk in the appropriate quadrant
Deal with the risks in each quadrant – Highest, Second Highest, Third Highest, Lowest.
Some of the risks faced in a construction business can be transferred to a third party. Think auto insurance, liability insurance, worker’s compensation insurance, etc.
Other risks can be handled by training employees and subcontractors in proper procedures and systems.
Regulatory risks (OSHA, public safety, environmental) should be shared by your subcontractors. Make certain that your subs are properly trained and managed. Track their certifications and insurances.
Use Cost-Benefit Analysis to determine the amount of effort to be exercised to ameliorate each risk.