Update on Professional Services SMEs & Money Laundering
Money laundering is a growing concern in Australia, and professional services firms are often caught in the crossfire.
Concern 2: Initial Investment Costs
Risk management in IT projects is all about identifying potential pitfalls before they turn into major issues. It’s crucial because unmanaged risks can lead to delays, budget blowouts, and even project failure.
There are various types of risks to keep an eye on:
- Financial: Budget overruns, unexpected costs, vendors’ pricing changes, and hurdles in getting top management’s approval to fund the project.
- Skills and expertise: IT projects in SMEs may demand a broader and deeper suite of skills than the team holds, and there’s a skills shortage, with IT project management among the most in demand.
- Strategic: Changes in project direction or objectives.
- Performance: The project’s output doesn’t meet the expected quality or standards (integrating legacy systems or disparate applications with a new system may open a can of worms).
- External: Factors outside your control such as regulatory changes or market conditions.
- Opportunities: Positive risks that can be exploited to benefit the project (think generative artificial intelligence apps).
The Risk Management Process
Effective risk management follows a structured process involving:
- Identification: Start by brainstorming all potential risks (remember to prioritise cybersecurity).
- Analysis: Evaluate the likelihood and impact of each risk.
- Prioritisation: Focus on the most significant risks.
- Mitigation: Develop strategies to reduce or eliminate risks (test new systems thoroughly before full deployment; ensure staff are adequately trained).
- Monitoring & evaluation: Keep an eye on risks throughout the project and adjust your strategies as needed.
Tools such as risk registers and risk management plans can help you keep track of all this information. A risk register is a document where you can record all identified risks, along with their analysis and mitigation strategies. A risk management plan outlines how you will handle risks throughout the project.
And learn about risk multipliers that can really put a spanner in the works. That’s when different risks intersect and amplify each other.
Managing Client Expectations
One of the biggest challenges in IT projects is managing client expectations. It’s essential to set clear project scopes from the get-go. Define what the project will deliver, when it will be completed, and how much it will cost. This clarity helps avoid misunderstandings and scope creep.
Open communication is key. Regular updates and check-ins keep clients informed and involved, making them feel valued and heard. Encourage clients to give feedback and be proactive in addressing their concerns. This approach builds trust and keeps everyone on the same page.
Productivity expert and IT professor Cal Newport advocates for a regular ‘office hours’, say an hour or two weekly when clients know you’ll be available online to answer their questions live.
Practical Risk Mitigation Strategies
Avoid: Change your project plan to eliminate the risk.
Accept: Acknowledge the risk and prepare to deal with it if it occurs.
Reduce: Take steps to reduce the likelihood or impact of the risk.
Transfer: Shift the risk to a third party, such as through insurance or outsourcing.
For example, if you’re worried about a new technology not performing as expected, you might decide to avoid the risk by sticking with a more proven solution. Alternatively, you could reduce the risk by conducting thorough testing before full implementation.
If you think a collaborative approach might be a good fit, check out the CSIRO’s Innovate to Grow program.
Monitoring and Adjusting Strategies
Risk management isn’t a set-and-forget task. It requires ongoing monitoring and adjusting as project dynamics change. Regularly review your risk register and management plan to ensure they are up-to-date and relevant. Be ready to adapt your strategies to new risks or changing project conditions.
Staying vigilant and flexible allows you to respond quickly to issues, keeping your project on track and your clients satisfied.
Managing project risks and client expectations is no small feat, but with the right strategies in place, it’s doable.
Don’t forget the value of working closely with your insurance broker or adviser. We can provide tailored risk management solutions that fit your specific needs, giving you that extra layer of protection and peace of mind. So, get ahead of the game and make risk management a top priority in your IT projects.
Use these tips to vet and select high-quality tenants who reliably pay the rent and treat your property as their cherished home.
- Price the property competitively
- Invest in professional photography to advertise the premises
- Have more than an inkling of your target demographic and where you could reach them
- Do reference checks, verify their identity, check the National Tenancy Database blacklist, and see if the would-be tenants’ names come up on past bankruptcies, court records or ASIC data
- Recruit a recommended property manager.
Concern 7: Handling Difficult Tenants
Try these strategies for managing tenant disputes, rental arrears, noisy tenants, evictions and more:
- Be calm as you discuss the issue to work out your next step
- Collect information to work out if there’s a middle ground
- Understand your rights and the Residential Tenancies Act in your state
- Communicate clearly and promptly, keeping records (email the tenants after you meet with them to confirm what was discussed)
- If needed, consider issuing a breach notice, notice to vacate, terminate the tenancy agreement, or apply to your state’s tribunal
Concern 8: Regular Maintenance and Repairs
The challenge of maintaining property condition and value.
For instance, the first you might know about the gutters being blocked is when the tenant (or property manager) rings about mould in the house. Set yourself a reminder towards the end of autumn to have the gutters checked and cleaned.
Concern 9: Achieving Long-term Financial Goals
Balance short-term yields with long-term capital growth. And, when you do sell the property down the track, factor in capital gains tax.
Boosting your risk management
A safety net is available – landlord insurance. It’s a cornerstone of prudent investing. Often, a landlord insurance policy could cover:
- Tenants or their guests damaging or stealing from your property
- Rental income loss
- Rent default
- Legal costs should tenants take you to court
- Liability, and
- Building cover for fire, lightning strikes, flooding and water damage, tree falls, explosions, vandalism, storm damage, impact (of a car crash into the home or break-in).
If your investment property is furnished, you can opt to cover appliances, furniture, carpets, curtains, and fittings for a range of events.
There are exclusions, such as for building defects, market conditions, general wear and tear, tenants’ ‘handiwork’ and general maintenance.
A customised policy for your unique circumstances can take the stress out of property investment and build confidence. That’s where we can help, as your broker/adviser.
Article Supplied by OneAffiniti
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