Business leaders think about risk often. Are we protected against devastating cyberattacks? Are our physical locations secure? Do we have plans in place if operations get interrupted by a natural disaster?
These types of questions are common discussion topics within organizations. However, effective risk management is about much more than just protecting a business from scary-sounding, external threats. A holistic risk management approach considers anything that might be an impediment to success. What blind spots do we have as an organization? Are there opportunities we’re not taking advantage of that could move us forward?
What we’re really talking about here is opportunity risk, or missing out on a potentially profitable situation due to inactivity or lack of understanding. To address this type of risk, a clear corporate focus on diversity, equity and inclusion (DEI) becomes critical. Savvy businesses know that they need to reach diverse communities and customers, while providing products and services that meet their unique needs, to take advantage of opportunities and stay ahead of the competition.
The example of drilling for oil can help illustrate this point. If you keep drilling in the same spot, it will eventually dry up. However, a smart oil driller will find new areas to tap into over time. In that same spirit, business owners that want to grow their operations need to regularly find new customers to serve. The “same old, same old” will only work for so long.
With the U.S. population becoming more and more diverse1, it makes sense that potential customers are becoming more diverse, too. As demographics shift, so does consumer sentiment. Two out of three American shoppers say their social values now shape their shopping choices2. They’re looking for businesses that understand them and care about their communities. And if your customers are other business owners, the same ideas apply, as roughly 20% of U.S. small businesses today are minority owned3 — a number that should continue to rise.
This all makes a strong commitment to DEI a necessity for businesses, not just something that’s popular or “nice to have.” Organizations that excel in this area can win over these increasingly diverse customers, while businesses that miss the mark risk falling behind. Here’s what that DEI commitment can look like:
A strong presence of diversity at the decision-making table. Do the leaders at your organization reflect different backgrounds and bring unique perspectives into the fold that can help you better understand your customers?
Conscientious customer segmentation – specifically, ensuring all products and services are catering to every culture within your organization’s service area.
Showing up authentically in each community your business serves. This means reaching all audiences by centering your marketing and business strategies within a DEI framework that is knowledgeable of your audiences’ needs.
Businesses must constantly evaluate their weaknesses and threats — and oftentimes, business leaders forget that this includes a lack of diversity, equity and inclusion. A thoughtful, well-rounded strategy that combines DEI and risk management can help a business grow and succeed well into the future.