Your overall risk management system, while it does not need to be formal, needs to have contingency plans in place for whatever "surprises" might occur and employees need to be trained in how to handle these "surprises." What do I mean by "surprises?" It could be someone entering your retail store with a gun and asking for the all the money in the register. It could be the river in town overflowing and flooding your place of business. It could be you having a heart attack unexpectedly. It could be your best supplier closing its doors.
Risk management involves five steps:
Formulating strategies to limit it
Carrying out specific tactics to implement those strategies
Continuously monitoring the effort
Does this sound a little too complicated for your small business? It doesn't have to be. Here is how you can apply this wisdom in a simple way initially that will set you on the right path as you grow.
A good place to start is with your business plan. If you don't have one, do it now. Reading through your business plan with an outsider's eye gives you a good overview of where some of the problems might arise. Think of yourself as a banker deciding to fund the business, what would you worry about happening that could cause this business to default on its loan? This is not a time to try to ignore dire possibilities. I promise you something you didn't anticipate will happen. The more backup plans and alternatives you have available, the better off you will be when it does.
While you can't anticipate everything, a good brainstorming session in which you look at "what if thus and so happens" will go a long way towards helping you plan for some of the emergencies that arise. If possible, include others who have very different perspectives in this brainstorming session. Taking some time in your startup phase to go through this "what if" process may even alert you to some unanticipated outcomes that indicate a need to modify your business plan.
There are many businesses you could contact to provide risk management consulting for you. The difficulty is that many of these businesses are also highly specialized. You are in the best position to assess your risks. I, personally, would save the consultants for the time when your business grows to a large enough level that you are considering going public or have outgrown being a small business. You can also buy many complex computer simulation models for anticipating risks. While these are great tools, they are also time consuming and expensive. Save them for later. Be thorough, but go for simplicity.
From your brainstorming session you should have developed a list of all the possible risks you need to manage. Using these lists, decide what action or coverage is needed for your business to handle each possibility that you outlined. Consider alternatives. For instance, a fire alarm system may greatly reduce fire insurance or may negate the need for it at all. Once you have this list you are ready to look at what you need to put in place to manage your risk.