Risk Management Strategies for Small Manufacturing Businesses


If you’ve recently started out with your own manufacturing business, whether it’s arts and crafts-related, producing textiles and apparel or in the food and beverage industry, you will no doubt have come across your fair share of challenges so far. You often can’t predict complications like supply chain disruption, customer order cancellations or even product recall.

This is why a comprehensive risk management strategy is essential. With a good system, you can keep disruptions to your business operation at a minimum.


When you launched your business, you probably took out an insurance policy. You may want to check that it has the correct level of cover to accommodate any times when you may be unable to operate due to adverse circumstances.

You may also find it helpful to discuss with insurance providers how you can source the appropriate cover for your business needs. Often it’s possible to find something that is more tailored, such as a manufacturing insurance policy.

A risk management plan

The best risk management plans cover all levels of the business, from the heads of departments to the staff who operate under them.

After a thorough risk assessment process, you can compile a contingency plan that addresses each potential risk. As the business grows and evolves, the plan should be regularly updated.

Identifying risks

Start by identifying all the potential risks. Cancellations, payment issues and data breaches could be among these. Then weigh up how severe each could be.

After this, systematically look at each one and assess how preventable they are. Plan which new measures your business can implement to decrease the likelihood of each problem. You can also plan ways to mitigate the risks of unpreventable issues, for example flooding, and look for ways you would be able to access support in the event of unprecedented disasters.

Some of the problems that small manufacturing businesses sometimes encounter are:

  • Operational risks e.g. manufacturing equipment breaking down
  • Financial challenges
  • Compliance risks e.g. mishandling of customer data
  • Supply chain issues e.g. delays/cancellations from external suppliers

Being proactive is the only way you can be prepared.


There are many strategies you may investigate to plan how you will tackle each issue that arises.

For example, it’s important to ensure your staff training is as comprehensive as possible to plug any knowledge gaps and reduce the possibility of human error contributing to major business disruptions. Regular equipment safety checks can also minimise the chances of equipment breakdowns and operational disruptions.

To soften the blow of staff shortages, you may also want to cross-train your staff. This gives them the ability and the confidence to step up to the responsibilities of other roles if needed.

Your business can’t stay alive without a solid financial underpinning, so you won’t want to overlook this area either. Keep a handle on your business cycle so you know how much revenue you need to make to cover your costs during every month of the year. Set aside an emergency fund that could cover you for at least 3-6 months.


Planning for risks is essential so that all the hard work you’ve put into building your business never goes to waste. A risk management plan is vital to protect you and your employees against unpredictable problems.

Managing risks in your manufacturing business does not have to be costly. For ways you can save on labor costs without sacrificing safety, please see the resource below.

Provided by scaffolding parts supplier, Atlantic Pacific Equipment

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