An organization cannot exist without taking any risks. The question is, how to manage those risks to improve predictability and reduce the level of risk?
Don’t make risk management an expensive and time consuming project.
Too often risk management is seen as a time consuming exercise. I personally believe that this is unnecessary. When we talk about strategic risk management, it is possible to have just one or two sessions of about 1.5 hours with the top management to list all the risks.
Focus on the top 10 risks
Make sure the focus is on the top 10 most important risks and don’t bother working on all the risks for the moment. It is important to assess the risks by next year, as by then you can focus on the other risks to the organization.
Align the company objectives with the risks
To accomplish this, start with the stakeholder analysis including the objectives of every stakeholder related to the company. This helps you focus on the important risks that have a direct effect on the stakeholders and the objectives.
It is very important that the employees support the risk management. In order to increase support it is essential to communicate the importance of the risks and that people understand why certain actions are taken.
Have a clear division of tasks
After all risks are registered it is important to assign owners to certain tasks, preferably people in higher management positions. They will then be responsible for the corrective and preventive actions taken to reduce the risk levels. The managers can give certain tasks to other employees but they are responsible for the risk.
Go further than only financial risks
Most companies have the financial risks in order due to the yearly check by an accountant. There are more than just direct financial risks for an organization. Make sure you also think about the broader picture than pure financial risks.
Use risk management as a guide for management
Risk management is much more than just listing all the risks. It is an instrument to help management get a good picture of the risks involved. Next to this, it is a great tool to perform and manage corrective and preventive actions based on these risks. Furthermore, it holds some great input for the yearly management and the actions give a good measure on how management performs.
This article has been written by Jantina van Rossum of iConact.