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A perspective on the importance of Risk Management for Startups

Start Codon COO and Co-Founder Daniel Rooke shares his views on why risk management should be on every founder's list of priorities.

Reflecting on the importance of risk management for early-stage start-ups, Daniel Rooke said:

“A lot of people think of risk management as reactive, but it’s really important that – even at the earliest stage of a company being created – risk management is treated as a proactive tool that can inform your strategy.

“Approaching risk management in a proportionate way – prioritising time on the risks that could have the biggest business impact – is key, especially for early-stage companies. When approached in this way, effective risk management can help founders understand key company, market, micro- and macro-economic factors, all of which can and will impact their business. It will also help build investor/potential investor confidence by demonstrating you understand your risks and have plans to mitigate these.”

Daniel has created his top three tips for founders/startups when it comes to risk management:

1. Reframe how you think of risk management – think of this as a positive activity that can help you with planning and improve your company’s value.
2. Don’t just keep risks in your head – create a risk register and update it periodically (at least twice a year and whenever there is a major change e.g. reaching a key milestone, new leader or investor, change in business priorities/goals etc.).
3. Make talking through the risk register a team activity – people will spot different types of risks, whether in relation to fundraising timelines, IP, security, business continuity, reputation or any other aspect of your business.