Business Growth and Risk management

The key to business growth: Risk Management

Knowing how to manage risk is a vital part of growing your business. There are three areas where risk is most prominent for small to medium enterprises (also known as SMEs) – fraud, human capital and cyber. We take a closer look at these issues, including how they could be putting your business at risk and what you can do to manage it.

But some risks are particularly difficult to manage, even for large companies, and usually involve a human factor. Three particularly thorny areas are:

  • Fraud
  • Human capital risk
  • Cyber risk


Fraud is on the rise within SMEs. The instance of fraud has increased globally since the global financial crisis, according to KPMG's fraud survey and SMEs are increasingly a target. While deficient internal controls can be responsible, these can still prove a flimsy protection against the committed thief. The time to be most on guard is when household debt servicing ratios rise and during times of declining GDP.

Human capital risk

Companies that manage people well are tipped to outperform those that don't by between 30 per cent to 50 per cent, so human capital risk is a key issue for SMEs. Poor hiring choices convert to poor customer service; loss of revenue and market share; competitive disadvantage; higher production costs; brand risk; and legal liability. Great workplaces, superior leadership, good life work balance and cross training are all strategies small to medium-sized companies can use to target the human-capital underbellies of big companies.

Cyber risk

Cyber risk is another bogey. Banks offer firewall services for customer credit-card details and many SMEs are flocking to these cyber shelters. Otherwise, best practice is to stay up to date with cyber risks; educate staff, ensure software is updated, have a strong policy on BYOD (bring your own device); use strong passwords; have a strict employee transition policy and be wary of strangers in the guise of delivery men or utilities servicers. A growing number of companies offer support in this field and many security specialists conduct seminars for SMEs.