Episode 3 - What Could Go Wrong? A Simple Guide to Risk Management

This won't come as a surprise to you - something always goes a little sideways when you run a business. But that doesn’t mean you have to stay in reaction mode.

In this episode of The Green Ledger, we take a big step toward building true business resilience by breaking down risk management into a simple, 3-step framework made for small businesses (no corporate-speak here). Whether you run a café, a food manufacturer, or a growing CPG brand, this episode will help you spot what could go wrong before it becomes a crisis.

We’ll cover:

• How to identify and categorize risks specific to your business (with real-world examples)
• How to use a simple heat risk map to prioritize what matters most
• Four ways to respond to risk (avoid, reduce, transfer, accept) and when to use each
• Why some risks that look “low priority” today could become urgent later - and how to keep your map dynamic
• How benchmarking can reveal hidden risks from consumer trends, climate impacts, and industry shifts
• And why managing risk isn’t about being paranoid - it’s about staying competitive

We also talk about how this risk work ties directly into your Business Continuity Plan - making both stronger.

💌 Questions? Feedback? Ready to build your plan with a guide by your side?
Reach out at anca@3pimpactconsulting.com - I’d love to hear from you.

🎧 Listen now - and take the first step toward a more resilient business.

I am the founder of 3P Impact Consulting and I help small businesses build long-term resilience through sustainable practices. I adapt tools used by big corporations to fit the reality of purpose-driven small business owners - so they can grow with confidence, even in uncertain times. 

💻 Learn more about my work at www.3pimpactconsulting.com/services
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Transcript

Podcast Episode 3: What Could Go Wrong? A Simple Guide to Risk Management

Hello and welcome back. Last week’s episode was on Business Continuity Planning - how to stay open and functional when the unexpected hits. Today, we’re going one step earlier. Before we even think about recovery, we need to talk about prevention.

So today's episode is titled: "What Could Go Wrong? A Simple Guide to Risk Management". Because, right? Running a business means something always goes a little sideways. But that doesn’t mean we can’t plan for it.

Oh, and one more thing - the work you do in this episode will actually strengthen your Business Continuity Plan. There’s some overlap here. The Business Continuity Plan usually looks at risks more broadly. It includes a longer, more exhaustive list that considers all critical functions and what would happen if they were disrupted. When you identify risks and start thinking through responses, you’re already laying the groundwork for a more solid, tailored Business Continuity Plan.

So, why should you care about risk management?

First off, let’s define it. Risk management is simply the process of identifying what could go wrong in your business, figuring out how likely it is, and deciding what to do about it. 

Small businesses often skip this step. You’re busy. You’re focused on getting orders out, managing people, fixing problems. But the reality is that small businesses feel the impact of disruptions much more than big ones. One broken fridge, one key employee out sick, one bad storm - and boom, your whole operation is in chaos.

So today, I’ll show you a simple 3-step framework you can use to manage risk in your business. It won’t take more than an hour or two to get started, and it can save you weeks of stress and confusion.

Ok - Step one: Identify what could go wrong.

This is your chance to do a brain dump. What keeps you up at night? What disruptions have thrown your day off track before? Think about these in categories:

●     Operations: Equipment breakdowns, delivery delays, software crashes

●     People: Key employee leaves, staff shortage, illness

●     Money: Cash flow problems, late-paying clients, rising costs

●     External: New regulations, tariffs, power outages, supply chain hiccups

After you look at this with your head down, from the perspective of what happened to you already, or could happen to you, lift your head and change your perspective. Take a look at what’s happening around you - in your industry, in your local area, maybe even your competitors. This is called ‘benchmarking’.

This doesn’t just mean copying what others are doing. It’s more like scanning the horizon - listening for patterns or signals that your peers, competitors, or industry leaders are responding to.

For example, are other businesses in your sector starting to shift to compostable packaging? That could signal a change in consumer expectations - or a local ordinance coming your way.

Are shops near you installing shade canopies or air conditioning upgrades? That might be a quiet response to increasing heat or climate-related regulations.

Even noticing that competitors are investing in certifications, adding carbon footprint labels, or sourcing locally can be a signal. These changes might not feel urgent now, but they hint at long-term shifts that could affect your business down the line—whether it's customer loyalty, compliance costs, or brand reputation.

Benchmarking helps you catch these signals early - before they become disruptions. That’s smart risk management.

Take a few minutes and write down at least 5 risks that feel relevant to your business. If you want to challenge yourself, go for 10.

Now that you have your list, Step two is: prioritize.

You don’t need to fix everything at once. That’s overwhelming. Instead, use a simple tool I love: the Heat Risk Map.

Picture a grid:

●     Across the top is how likely something is to happen.

●     Down the side is how bad the impact would be if it did happen.

Each risk goes somewhere on that map. Some things are unlikely and low impact - you can let those go. But anything that is both likely and high impact? That’s red zone. That needs your attention.

Here’s a simple example. Let’s say you run a bakery. One of your mixers is a little old and noisy. It’s not a huge problem today, but you know it could die any moment. High likelihood. And if it does? You can’t fulfill your morning orders. High impact. That risk goes in the red zone.

On the flip side, maybe you’re worried about a new tax regulation. It could hurt your bottom line, sure, but it’s unlikely to hit in the near future. That’s a yellow - watch it, but don’t stress just yet.

So these yellow-zone risks are risks that are either likely but with a small impact, or rare but with serious consequences, or you’re not clear yet on the impact and likelihood of happening, but they are not a short or medium term risk. These risks don’t need immediate action, but they shouldn’t be ignored. Create a watchlist and set a reminder to revisit them quarterly. Some of them might slowly creep toward the red zone over time - or be tied to a specific season or event.

I want to quickly touch on the timing aspect here. Yes, timing matters. A risk that seems moderate right now might become urgent in six months. Tariffs, for example, might not affect your costs today, but if they’re scheduled to take effect next quarter, that yellow could quickly turn red. So make a note of timing and reevaluate regularly. This keeps your map dynamic - and your business ahead of the curve. 

As what we just covered is fresh in your mind, I want to bring up again the difference between this risk management plan and the business continuity plan. You might only focus on a few key risks in your risk management plan, but your business continuity plan should reflect a full range of threats - even the low-likelihood, high-impact ones - because the goal there is to plan for how you’ll respond when things go wrong, not just prevent them.

Alright, Step three: Do something about it.

Once you’ve identified your top 3-4 red zone risks, think about how you can reduce them. You don’t need a full-blown plan right away. Start small.

There are 4 common ways to deal with a risk:

●     Avoid it: This means eliminating the risk entirely. For example, if a supplier has been repeatedly unreliable, you might switch to a more dependable one. Or if a certain product line is causing too many problems, you might discontinue it altogether.

●     Reduce it: You take steps to lessen either the likelihood or the impact. This might look like routine equipment maintenance, installing backup systems, cross-training employees, or investing in better-quality inputs. The goal is to build buffers before something breaks.

●     Transfer it: This is where you shift the financial impact of a risk to someone else - often through insurance or contractual agreements. If a critical delivery delay would cost you a fortune, but your contract includes a penalty clause, you've effectively transferred part of that risk.

●     Accept it: Sometimes the cost of addressing a risk is greater than the cost of the risk itself. If something is unlikely and wouldn't cause serious disruption, you might choose to accept it - but that doesn't mean ignore it. Keep an eye on it in case it changes.

A small manufacturer I worked with realized their payroll was handled by one person - and that person was going to have a surgery soon. So they trained a second person and documented the steps. Simple fix, huge peace of mind.

So think: What’s one thing you can do this week to reduce the chance or impact of one of your top risks?

Now let me flip your mindset a little.

Risk management isn’t just about avoiding problems. It’s about spotting weaknesses before they break. And when you do that, you often find opportunities to improve, innovate, and get ahead of your competition.

Let’s take that old mixer again. Yes, it's a risk because it could break down, but it also might be costing you more in energy or producing inconsistent results. Identifying it as a risk might lead you to invest in a newer model - one that’s more efficient and reduces waste. Now you've turned a vulnerability into a value driver.

Or maybe your review of supply chain risk leads you to local suppliers. Not only do you reduce dependency and lead time, but you also enhance your brand story - supporting local businesses, lowering emissions, and connecting with your community.

Even things like staff turnover can become a catalyst. If you identify the risk of losing a key team member, you might implement cross-training or better onboarding - which then improves morale and retention overall.

When you make risk awareness part of your core business processes, you create space for smart growth. You make decisions not out of fear, but out of readiness. And that readiness is what builds resilience.

So don’t treat this as a burden. Treat it as a competitive edge.

Okay, let’s recap:

●     Step 1: Identify what could go wrong

●     Step 2: Use the Heat Risk Map to rank your top risks

●     Step 3: Take small, meaningful action

This week, take 30 minutes with a cup of coffee or tea, and write down your risks. Then pick just one to work on. That’s it. You’re now doing risk management.

I’ll link the Heat Map in the resources for this episode. Download it to guide you in this process. Drop me a message if you don’t see it there.

Next time, we will shift gears. In Episode 4, we’ll explore how to choose the right priorities based on what your business stands for and what’s happening in the world around you. It’s called: "What Matters Most  -  Choosing the Right Priorities for Your Business". You won’t want to miss it.

Remember: being resilient isn’t about being perfect. It’s about being prepared. Thanks for listening today. See you next time.