How monitoring risk can help you build a more robust recovery

When the initial threat passes and risk levels appear to recede, you might be forgiven for focusing on other priorities, but the smart businesses are those that maintain robust risk management practices as you return to growth.

As business picks up, don’t let financial, business or event-type risk de-rail your recovery. Take steps to understand and mitigate recovery risk.

Mind the bumps – Recovery is rarely linear, and there will be bumps in the road. Managing your exposure to price and currency volatility within both your sales and supply chain can help smooth out those bumps and protect your margins. Hedging your currency and/or commodity exposure is a good example.

Maintain your agility – Meeting growing demand, particularly if sales start to ramp up quickly, can put a strain on your working capital as well as relationships with suppliers and distributors. And in the early days of recovery the risks of non-payment or non-fulfilment of supplies can be high. Tools that reduce the risk of non-payment and boost your liquidity, such as receivables or trade finance can help you manage your cashflow more effectively. Supporting your supply chain, either through a formal supplier finance solution or by renegotiating terms, can help reduce supply chain lags that could compromise your recovery.

Stay alert – It’s an unfortunate truth that opportunistic threats can increase when businesses face unusual circumstances or resources are stretched. Criminals are quick to take advantage and can pose short-term risks to your ability to service your customers, as well as longer-term risks to profitability and reputation. Refreshing staff training on spotting cyber-threats or fraud, and ensuring your policies, processes and systems are and remain up to date, can protect your business from criminal activity.

Please contact your local HSBC representative to discuss how we can help you and your business.