Risk Management: 5 tips to improve your business through this process
Updated: Oct 18, 2018
As human beings, we are aware that risk is part of all our activities; in fact, we know that it will be present whenever we wish to execute a plan. The business world is no exception; the risk is also an inherent part of it. However, this does not have to carry a negative connotation for companies; with the right strategies, any organization can achieve a Risk Management that benefits it widely.
Read on and through these simple tips; turn Risk Management into an opportunity to achieve success in your organization.
Why Risk Management?
Before answering this question, it is important that we define some terms. First, we must define what risk means. In this context, when we speak of risk, we refer to one or more unforeseen events that may affect the organization’s ability to achieve its objectives. The degree of risk intensity is measured by comparing the probability of the incident occurring with its impact on the company. The possibility of a certain degree of risk in any of the operations or activities carried out by the organization is imminent, so the establishment of a Risk Management strategy represents a vital resource when it comes to ensuring the smooth running of the business.
Risk Management can be defined as a process of continuous improvement aimed at identifying, evaluating and minimizing, among other things, all possible risks related to the activities, operations, and assets of an organization. The main purpose of Risk Management is to define and execute strategies to prevent and reduce risks in order to guarantee Business Continuity at all times.
Advantages of Risk Management
Appropriate Risk Management; can offer companies multiple advantages such as the following:
Increased ability to anticipate unexpected events.
Improved decision making.
Increased reliability of risk reports.
Reinforcement of the confidence of investors and clients.
Effective vulnerability identification.
Definition of more appropriate incident response strategies.
Those organizations that do not have an effective Risk Management strategy or, in extreme cases, do not have one at all; they risk suffering situations in which the impact of negative events or threats exceeds their response capabilities. Fortunately, it is never too late to adopt a truly successful Risk Management approach that offers solidity and confidence to the organization in terms of incident prevention and management.
Follow these simple tips and start your way towards successful Risk Management.
Appropriate Risk Management cannot give you the capabilities to predict the future, but it can offer you an approach that allows you to detect the appearance of threats early enough to respond effectively.
To be able to anticipate incidents, you must be able to carry out a complete analysis of your organization; in which all the elements that compose it are well defined as well as its strategic objectives. Before establishing a plan, think about taking into account not only the company’s current situation but also possible future scenarios. It is recommended that you do not underestimate any possible high-impact event; even if it seems unlikely.
Risks can also represent opportunities; so your ability to anticipate them can equally mean an opportunity to ensure the competitiveness of your business.
All the elements that make up the organization can be evaluated to attribute the corresponding degree of risk. However, not all of these metrics are useful for your business. For this reason, the most appropriate method is to focus time and effort on defining strategies aimed at determining the most exposed areas of your organization, and whose functioning is of the utmost importance when it comes to guaranteeing the continuity of service delivery.
Establishing roles and responsibilities adapted to the capabilities of each member of the organization is vital to ensure efficient Risk Management. A Risk Management strategy should not only impact the company’s processes but also its culture. Why? Because it is much easier to execute a control plan in which all the actors involved are convinced of the importance of the measures established for the success of the business.
On the other hand, it is important not to underestimate the need to define a Risk Management team that counts with the leadership and skills of a Manager. This figure can make the difference between the failure or success of your strategy; as it is responsible for carrying out vital activities such as:
Evaluate and determine vulnerable points.
Establish prevention strategies.
Create reports of results.
Manage crises and incidents.
Optimize the overall cost of risks.
Proper risk management is an issue that affects all areas of your business, therefore; all people involved in the operation of the organization should be aware of the measures in place to protect it from unforeseen events. Regardless of the fact that some of the actors involved do not handle the required technical terminology; the work of the Risk Manager and his team should also be focused on transmitting information clearly both to employees in general and to senior executives.
In this way, all human potential will have knowledge related to acceptable and inadmissible behavior, associated to the Risk Management strategy.
#5 Invest in Business Intelligence
The use of these outdated (and limited) tools may have worked moderately well for you for some time. However, it is important to keep in mind that digital transformation is driving companies to go to the forefront of technology to maintain their competitiveness in the market.
If what you want is to achieve truly effective results that include efficient processes and total customer satisfaction; it is best to invest in a software solution that offers you not only functions focused on Risk Management but in the comprehensive governance of your organization.
You can find a great option in one of the market leaders, ServiceNow. This tool offers you an infinity of functions oriented to give you total visibility of all the critical elements of your business. These functions include processes relevant to Risk Management; such as Incident Management and Problem Management. In addition, through it; you will be able to adopt the best ITIL practices that will allow you to bring a simpler Risk Management through the establishment of a CMDB.