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External and Internal Factors of Financial Risk

Bookmark and Share Every small business faces financial risks. However, you can lower your risks and improve your chances of success when you become aware of several external and internal financial risk factors.

External Risks

Economic Risks

Economic downturns or failures as well as economic changes within certain industries, geographies or demographic groups play a role in your business's success. Any of these changes can decrease income and increase expenses.

While you cannot eliminate or even control economic risks, you can prepare for them.

  • Strategize ways to combat economic downturns.
  • Boost savings during good economic seasons.
  • Diversify investments, products and your customer base.
  • Pay debts quickly.
  • Look for new financing options regularly.
  • Continue to innovate.
Legal Risks

Safety regulation updates and tax law changes can happen at any time. You may find yourself facing a mandatory safety system upgrade, an unexpected property tax increase or a government ban on a product you produce.

Prepare for legal risks when you save a cash reserve. It can pay for unforeseen regulation or tax changes. Be sure you stay up-to-date on industry trends, too, so you are better prepared to shift your business model, focus or products based on legal changes.

Internal Risks


Part of your business strategy may include extending credit to your customers. You give them the product and they have a set time to pay the invoice. Sometimes, though, those customers cannot or will not pay their bills on time. As a result, you will not be able to pay your expenses.

Consider requesting payment up-front or build a cash reserve that covers unpaid invoices and all your regular expenses. These steps allow you to continue paying your bills, and they protect your business.

Performance Risks

You have a great deal of control over performance risks even though they vary based on your specific business and its structure and products. Some typical performance risk factors that affect your bottom line include underperforming quarters, bad investments, new competition, planning errors, personnel challenges or quality issues.

These performance risks are often avoidable. Consider implementing several helpful suggestions.

  • Save enough cash to cover a slow quarter.
  • Decrease expenses and debt where possible.
  • Maintain consistent high quality standards.
  • Improve your hiring process then take measures to retain quality employees.
  • Focus on doing the best job possible so you can confidently face competition.
  • Evaluate performance regularly with a mentor and financial advisor.
As a small business owner, you will face financial challenges. However, you can prepare to face both the external and internal factors of financial risk. Make an appointment to meet with your financial advisor and discuss ways to combat these risks and help your small business succeed.

Safety While Operating Heavy Equipment

Bookmark and Share Bulldozers, scrapers, and tractors, oh my! A jobsite crawling with heavy equipment can sometimes feel like a danger zone. However, with the proper heavy equipment safety guidelines in place, you can reduce risk on your jobsite and ensure your workers head home unscathed each and every day.

There are three main ingredients to safe heavy equipment operation: Safe equipment, proper training and a safe attitude, and constant awareness of all jobsite activities. If heavy equipment operators are armed with these three tools, they’ll have no problem playing it safe. Read on to learn more about these and other essential safety factors for operating heavy equipment on the jobsite.

Play it safe with dependable equipment

The Occupational Safety & Health Administration (OSHA) puts a lot of emphasis on the safety features of heavy equipment. However, there’s much more to keeping equipment safe than just inspecting the machine’s safety features. After all, countless things can go wrong with this complex equipment, and these problems can lead to some major risks on the jobsite.

Therefore, it’s extremely important to create customized inspection checklists for each unique piece of equipment. Safety experts recommend that heavy equipment operators conduct a pre-operational walk around and pre-start up (in cab) inspection each and every day before they crank up.

During this inspection, the worker should ensure that service, emergency, and parking brakes are all functioning; headlights, taillights, and backup lights are operating properly; and that the horn is working. Of course, these are just a few of the items that should be included on the checklist. Employers should create customized checklists for each piece of equipment based on both OSHA guidelines and the information provided in the equipment operating manual.

Steer clear of jobsite dangers

Heavy equipment operators should be well aware of all jobsite activities so they can avoid any potential dangers. That’s why it’s critical for equipment operators to walk through site activity checklists daily. Here are a few obstacles and activities operators should stay on the lookout for:

Overhead lines: Many fatal occupational injuries occur each year in the U.S. due to contact between large jobsite equipment and overhead lines. That’s why equipment operators must exercise extreme caution when working anywhere near overhead power lines. Workers should assume that all overhead lines are energized, unless electrical utility authorities have indicated otherwise, and that they’re grounded visibly and marked appropriately. OSHA provides specific requirements for the safe use of equipment near overhead lines.

Barricades: Barricades must be used on any jobsite where heavy equipment is in operation. These barricades help to notify workers where equipment is in use so that they can stay out of the area and avoid serious injury.

Hand Signals: If a crane is operating on a jobsite, the crane operator and the signaler must know the hand signals that are required by OSHA. These hand signals can be used for other types of equipment, as well.

Ensure safety with well-trained workers

Of course, a jobsite is only as safe as its workers. That’s why it’s so important to employ only well-trained, safety-conscious workers for a heavy equipment jobsite. According to OSHA requirements, jobsites, materials, and equipment should undergo frequent and regular inspections only by “competent persons” designated by the employer. It takes training to be a competent worker.

It’s extremely important to train your employees on proper equipment inspection and operation safety. After all, your workers’ lives could depend on it. For more information, visit the OSHA website at www.osha.gov.

Differences Between Financial Risk and Business Risk

Bookmark and Share Starting your own business can be risky. Numerous factors can affect your success and your business's value. Financial risk and business risk are two common types of risks you face as a business owner. Know the differences between financial and business risk as you plan for success.

What is Financial Risk?

Your business's financial risk refers to your ability to repay creditors and still meet your other financial obligations. In general, financial risk relates more to your business's debts than overall financial health.

There are several types of financial risk.

  • Credit risk if your loans go into default
  • Liquidity risk if you cannot sell or purchase assets or securities quickly
  • Asset backed risk if securities fall in value
  • Foreign investment risk if foreign economies face downturns
  • Equity risk if stocks change in value
  • Currency risk if interest rates or monetary values fluctuate
Reduce financial risk when you:

  • Limit debts.
  • Repay debts on time.
  • Expand and diversify your customer base and investment portfolio.
  • Continue to look for ways to decrease overall spending and increase savings.
What is Business Risk?

Business risk describes cash flow. It relates to your business's ability to pay regular operating expenses, not debt. There are two kinds of business risk.

Systematic Risk

Systematic or systemic risk describes the economy in general. An economic downturn or failure because of a recession, economic crash, interest rate drop, natural disaster, war or other factor could cause your business to suffer.

Every business faces systematic risks, and you can't eliminate them. However, you can increase or decrease your systematic risk.

Unsystematic Risk

Unsystematic or unsystemic risk describes your specific business's chances of experiencing a downturn or failure. This type of risk varies greatly between businesses, and you can make decisions and take actions that increase or decrease your unsystematic risk.

Decrease your overall business risks when you:  

  • Make smart business choices that cushion your business against economic downturns.
  • Manage your finances properly.
  • Cut expenses when necessary.
  • Diversify your portfolio.
  • Own several businesses in various industries.
Why Should you Manage Financial and Business Risks?

The worth of your business depends in part on your risk factors. The more risks your business faces, the less it is worth. Improve your chances of succeeding and turning a profit when you decrease your reduce debt, improve your financial standing and take other wise steps.

For more information on the financial risks and business risks your business faces, talk to your financial advisor. He or she will help you plan for and successfully navigate the risks your business faces.

Hazards of Mold, and Prevention

Bookmark and Share The bad news: Exposure to indoor mold can trigger serious allergic reactions and even infections among workers and visitors to your building, leading to lost productivity – not to mention the costs and hassles of litigation.

The good news:
Taking precautions against this risk can help prevent health problems, limiting your exposure.

The potential for indoor exposure to mold has increased in recent years because of the way we live. To conserve energy, buildings are being built more tightly -- and the tighter the structure, the greater the exposure to indoor mold. Using synthetic building materials literally seals buildings and reduces air movement, creating a higher moisture content that nurtures mold growth.

Poorly designed or maintained heating, ventilation, and air-conditioning systems contribute to indoor mold exposure; Air filters and air filtration devices provide a comfortable habitat for mold, especially in high humidity conditions. HVAC systems can re-circulate air that contains mold spores and toxins if there are no effective filter systems to trap them. Failure to maintain and clean systems leads to unchecked mold growth and circulation indoors. Humidity worsens the problem; mold thrives in humid conditions.

Human factors contribute to mold exposure, including the fact that we spend so much time indoors, and many of us have compromised immune systems from diseases and medications. What’s more, new and harmful mold organisms are circulating constantly.

Although there’s no practical way to eliminate all indoor molds and mold spores, to stop indoor mold growth and reduce the presence of mold in the workplace, we’d recommend taking these steps:

Clean small-scale molds ASAP, using a 10% solution of chlorine bleach; always wear the proper Personal Protection Equipment (which includes gloves, eye protection, and a mask to protect against airborne spores) and dry surfaces completely after cleaning.

Fix leaks quickly; moisture from leaks provides an ideal environment for mold growth.

Seal surfaces with a substance such as paint to which fungicide has been added.

Large-scale mold problems require the use of professional cleaning services that employ such treatments as oxidizers, fungicides, bactericides, and shielding compounds, which seal the antimicrobial agents within the treated surface.

Our risk management specialists would be happy to help you deal with mold problems in your workplace. Just give us a call.