How many times have you regretted not taking simple precautions could have prevented significant damage or discomfort in your business? Whether it is to ensure that anti-virus software is updated or fire is in place, you most businesses need to protect themselves against unpleasant situation. Small wonder, the management of risk is a scientific and highly critical business processes.
Risk is defined as the probability of something happening that will affect your business. It is due almost entirely of people, processes, procedures and natural events. When there is a possibility of loss, destruction, damage or inconvenience, it is termed as risk.
Risk Management is a continuous process of planning risk. It includes a detailed study of what you can do when something goes wrong, and understanding whether you have taken enough carefully or should do more to prevent harm.
The following steps will help you manage risk in your business.
Identify risks: It’s time to wake up and smell the coffee. Start by looking at all likely sources of risk. Think of it as a “what if” analysis. Ask employees about the main risks they face in their functional areas, and what corrective measures in practice. You can do this through brainstorming sessions, instant review or audit, conducting a SWOT analysis and so on. This allows you to assess the level of preparedness of the company to manage risks. Books such as “risk management process: Business strategy and tactics.” And “audit risk management process” from having a lot of information on this topic
Identify: This is one of the main steps in the risk management process. Having identified the risks, you need to evaluate and prioritize them. Risks that affect the ability to continue the business, financial well-being or the image of the company, are naturally the most critical. Others like unexpected interest rate change or enter in your bank will certainly have an impact, but still manageable
Reducing risks :. Although you can not completely avoid the risks in your business, you can certainly reduce it. Therefore, it is wise to appropriate risk-limiting measures. While you could argue that more likely, greater profitability, it is important to ensure that you take only calculated risks in the business
Decide on a plan :. Since many technical solutions are available, you need to choose the appropriate risk management process and implement it thoroughly. Choosing an appropriate strategy for your business to take into account the cost and time required for implementation and the resultant benefit of
Check program :. Risk your process has to be constantly reviewed to ensure that it serves the desired goals. . Set aside a budget for periodic updates
Creating awareness: This is possibly the most important yet neglected part of the risk management process. There is no use in having an elaborate plan, if no one knows about it. Ensure that there is adequate communication with staff about the procedures to be followed in a situation of risk. This is especially important in times of disaster, like an earthquake or fire.
The risk management process is an ongoing one and will be in sync with the business’ life cycle phone. All successful companies have a risk management program in place for eventualities ranging from natural disasters to security threats. Make sure your company is well prepared to deal with any untoward situation.