Internal risks are risks that come from within an organization and arise during normal business operations. These risks can have a significant effect on a business and can hinder an organization’s ability to provide investors and stakeholders with expected returns. Organizations have a good chance of reducing their internal risks by performing an internal risk assessment. Through doing this an organization can get a clear view of their risks so that proper mitigation steps can be taken.
The first step in conducting an internal risk assessment is to understand what the internal risk factors are so that the organization’s own internal risks can be easily identified. The three types of internal risk factors are human factors, technological factors, and physical factors.
Human factors can include but are not limited to:
- Employee dishonesty
- Ineffective leadership
- Union strikes
- Having key personnel away from work for a long period of time due to unforeseen circumstances, such as injury, illness or a disaster.
For most organizations, their employees and contractors are essential to the success of their business. Any major interruptions to operations or productivity can have serious implications. In some cases, it can even lead to the organization having to close its doors forever. You may not be able to anticipate exactly when one of the above human factors may happen, but it’s essential to identify which ones could be possible and have safeguards and plans in place to prevent and react to each of them.
Technological risk factors are risks that an organization may face due to unforeseen changes in the manufacture, delivery or distribution of a company’s product or service or in the logistics and operating systems. All of these factors can decrease productivity and even disrupt the organization’s ability to function at all.
Physical risk is, as the name suggests, the physical loss of or damage to the assets of an organization. Employee theft is the most common example of an internal physical risk, though there are other more specific physical risks that an organization may face as well.
Once a business has identified what their own internal risk factors are, they have to find ways to monitor and control each one. Internal risks can be confusing to navigate, but businesses can partner with a company that has expertise in identifying risks and managing them through sound strategies and insurance products geared specifically to an individual organization’s unique risk factors.
About The Rubin Group
Based in New York, The Rubin Group provides insurance in most of the 50 states. Our full-service insurance brokerage provides insurance and risk management services to individuals in all income brackets and businesses of all sizes and types. We understand that every client has unique coverage requirements, and we are passionate about providing the ideal individualized coverage for each customer. Each member of our team takes the time to truly understand your situation, the particular risks you anticipate – and the very real risks you’ve not yet contemplated. For all of your insurance needs, contact us at The Rubin Group!