Risks exist. The possibility that, in the course of any activity, a potential danger may arise leading to real damage (injuries of differing severity, material damage, financial losses, etc.) is part of our everyday experience. It is something we must assume and, as far as possible, we need to prevent such events and minimise their consequences.

In any sector, companies and professionals are exposed to risks of different types, according to their characteristics and the field in which they operate: financial risk, market swings, cyberattacks, employee accidents, third-party damage… the list is very long and can be constantly updated, as is the case now with the public health hazards caused by COVID-19.

The importance of identifying risks 

Risks are, by definition, random and somewhat unpredictable, but that does not mean that the commonest risks faced by a company or a professional cannot be identified, so that appropriate preventive measures can be taken and, if the threat becomes a reality, its consequences can be minimised.

Even environmental risks, which are not directly related to the decisions made in a company, can be identified and predicted, which is a great help for subsequently managing and controlling them.

The main tools for risk diagnosis 

To manage risks effectively, it is essential to identify them beforehand. This involves identifying and analysing the events that may occur in a company, and their possible consequences.

The following are some of the most effective methodological and diagnostic systems and tools to identify the risks faced by a company or professional:

  • SWOT Analysis. The identification of a company’s strengths, weaknesses, opportunities and threats (SWOT) is a strategic analysis used extensively by organisations around the world because of its versatility and wide range of applications, including the identification of risks. By means of this analysis, we can systematically identify potential risks and link them to the company’s overall objectives.

  • Process analysis. A basic methodological tool to quantify the possibility of operational risks occurring at a particular point in the processes used by a company.

  • Employee questionnaires. Very useful for detecting risks that are hidden or difficult to foresee, thanks to the experience and knowledge of those who know the organisation best: its own employees.

  • Brainstorming. This method consists of examining and discussing each position in the company, according to its functions and performance.

  • Benchmarking. A comparative analysis of risks we might have in common with other similar companies, in the same environment or sector.

  • Risk audit. A process to determine random risks conducted at an appropriate frequency.

How to control the impact of risks 

As we have said, risks have a random and unpredictable component, so they cannot be prevented one hundred per cent. For this reason, it is very important to monitor risks, trying to minimise their consequences for the company.

In this regard, having good civil liability insurance, which is compulsory for many activities, is one of the best ways to prevent the company from being harmed in the event of an incident causing damage to third parties, as the obligation to repair any damage caused to third parties will automatically pass to the insurance company.

Civil liability insurance covers, for example, compensation payable to third parties for personal, material or property damage, which will allow you to avoid financial or legal problems arising from a business or professional activity, an event you have organised, etc.

There is also specific civil liability insurance for directors and officers that covers legal and other expenses arising from their actions or decisions in business, ensuring that such costs do not affect their personal or family assets.

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