The words ‘risk management’ conjure images of a crisis that could disrupt your organisation. However, if you have a true risk management solution in place, this feeling should rarely be the case.
Being a successful risk manager requires the knowledge, foresight and ability to see disasters before they occur. The best risk managers use tools to help them achieve this.
It’s vital that you don’t confuse a crisis response plan to a risk management plan. Risk management is a continually evolving practice, so it’s vital to surround your business with tools to formulate strategy, execute and ultimately grow.
Below are the key things to remember when you incorporate risk management into your overarching business strategy.
Build a SMART plan
Risk planning is simply another way of saying – “think of the future”. Even if the plan is flying smoothly, for now, you need to think about potential hazards that can occur. The answer is to put yourself in different scenarios constantly and think about how to best respond. Consider the personnel, financial and organisational resources required to keep the business in line with the overarching strategy.
Identify the risks
Don’t fall into the trap that you think it’s possible to eliminate all risks. It’s actually impossible, as there is an infinite number of them. This is why we utilise technology as an extension of our mind to support this. But there is hope, and you can manage them within reason. Conduct a SWOT analysis and a PEST analysis every 6 to 12 months.
Have a strong response
Newton’s Third Law: For every action, there is an equal and opposite reaction. So when identifying and quantifying risks, take into account their potential business impact. Is it a high or low risk? For each potential business risk, think about the potential actions that need to be taken and the number of resources required you would be willing to spend. In some cases, you can come to terms with acceptable business risk. There also may be risks that could cripple your company. These risks require significant resources to avoid. In most scenarios, the risk will fall in between – it cannot be completely avoided nor accepted – so your business strategy should be to focus on mitigating the impact rather than pure prevention, as it’s unlikely you’ll get to every risk.
Time is your friend and enemy – take a
Remember the phrase: In the long run. Always keep a macro-term perspective on your risk management. You may face business risks along the way that set your organisation back. It’s vital to accept it as part of the business environment and keep moving ahead of the market. Risk management is one of the most vital sectors of any organisational strategy and you need to put the planning in yesterday.
How is my company effectively managing risk and putting these practices into their strategic plans? What tools are being used to facilitate risk managers, and chief risk officers? Let us know on social media and subscribe to our blog. ReadiNow.com team out!