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Are you aware of your businesses risks?

business risk management

Risk management can be a laborious task, requiring the mental strength of a chess master calculating his next dozen moves, hoping it will bring success. While assessing your company’s activities, projects and strategies against all risk factors may be a necessary exercise, it is important to look at it as a double-edged sword. When looking at the launch of Facebook, many risk managers would’ve advised against it, with industry leaders MySpace and Friendster controlling the market.

So why do we do risk analysis?

Risk management is in essence project management. It increases the chance that your endeavour will be a success. By forecasting and predicting risks to your company’s ventures, you are able to answer questions like: what are the legal liabilities, what are the threats from project failures or what credit risks do we face? It may also help you minimize the impact of foreseeable but uncertain events like accidents or deliberate attack from a competitor.

A risk management plan cannot help you identify uncertain or unpredictable events but rather reduce the impact of an unfortunate event, such as a natural disaster, with a suitable crisis plan.

Risk management varies across the functions within an organisation as each business unit comes with its own set of unique threats, therefore, any plan developed needs to be approved by the appropriate level of management. For example, you wouldn’t assign a marketing manager to develop and monitor a risk management plan for the protection of computers against a virus risk.

The following are common risk management failures, in various business functions:

Management ignoring warnings

Often this comes down to a lack of proper reporting procedures, as opposed to blatant disregard from a manager. Employees will regularly report a possible dangerous problem that could lead to personnel getting hurt, or note that an employee isn’t operating equipment safely.

Managers in haste to an important meeting could note your concerns but later forget to follow up, leading to equipment damage and/or personnel that could’ve been avoided. Where necessary, a simple reporting procedure that ensures safety and security concerns are addressed and resolved, within an acceptable time-span, would help eliminate human error.

Routine quality checks

Much like the recent Tiger Brand’s listeriosis debacle, the lack of routine quality checks can result in devastating losses of stock, market share or worse – customers!

When thinking of quality checks you need to assess yourself honestly against the following questions: when was the last time that a qualified professional inspected your equipment? How do you know that your equipment isn’t about to malfunction?

Without these important checks, you increase your company’s risk, when a thorough plan to have periodic checks can easily help you maintain a low-risk profile.

Late-running projects

Prevention is better than cure, wouldn’t you agree? An integral part of any project management task should be risk management. An experienced project manager, will try and predict any potential threats to a project. They will put plans in place to overcome them, unknowingly developing and implementing a risk management plan.

Implement scheduled “risk workshops”, where team members can discuss any potential risks that they foresee arising from new developments in the project.

Risk Management advice:

There is such a wealth of information online and published. Create a network for yourself, of people in risk management, so that you can learn from other organisations. Keep your focus on the value of risk management and not just the process, ticking boxes and complying – the point is to reduce our risk and improve performance. Be innovative and creative – there is no blueprint for managing risks.