Every business has unique goals, just as it has industry-specific risks. Achieving those goals while minimizing the potential risks is what every risk management plan strives to achieve.
The risk management process includes several key elements to help a business prepare for the worst and plan for the future. These include determining risks, understanding and prioritizing them based on occurrence and severity, developing a plan to reduce and mitigate those risks, and reviewing the process regularly to determine effectiveness.
There are a variety of factors that determine the frequency of certain things impacting your business, such as the type of industry, location of operations, number of employees, and training programs to name a few. Knowing what some of the common business risks are can help get the risk management process started. Some examples include damage caused by natural disasters, accidental injuries, cyber hacks, and lawsuits from customers or employees. Identifying risk factors in your own business and how they impact your ability to achieve your goals is the initial part of the process.
Once the risk factors of your business are determined, they need to be prioritized by the potential frequency that they might occur and the potential impact that they could have. Developed risk management techniques and strategies will go further by identifying which areas of your business need the most attention. Understanding which risks can have the most detrimental impact and are most likely to occur narrows down the top priorities of your customized plan.
Some common risk factors include location hazards, lack of employee training, technology failures, compliance with laws, and unsafe driving.
Developing an effective risk management strategy for your business is essential, and understanding which risk factors to prioritize over others is the key to successfully minimizing and managing them. This is where a risk management plan is developed to include many of the risk factors and the ways in which your business will need to adapt and adjust to prevent and prepare for those risks. Whether it’s training sessions for your team, adjusting operations, changing work schedules, updating technology systems or equipment, or putting resources into getting employees certified, the plan put in place will be driven to help reduce and mitigate risks specific to your business.
Because risk management is a cyclical process, reviewing the plan isn’t the end but simply another part of the system that makes it even more effective. The timing of these reviews can vary depending on your business and the specific risk factors involved but is key to helping improve upon the existing plan. And because things change in the world and your business over time, new risk factors may come up and will need to be accounted for. The review process also puts the achievement or failure of goals into consideration and may change the trajectory of your business for the better.
If you are interested in how to better identify and manage business risks, contact us to help you get started on the risk management process.