Risk Management is the process of identifying, analyzing and responding to risk factors.
Investing resources into developing an effective risk management program in an organization is an important choice that must not be underestimated. Effective risk management uses its process of identifying, analyzing, and responding to risk factors to streamline a company’s operations, making them more streamlined and able to catch problems before they appear or become unmanageable. Read below for four key steps to develop effective risk management.
Determine Your Organization’s Risk Appetite
Risk appetite can be defined as the amount of risk that an organization is willing to take in order to meet their strategic objectives. Defining your organization’s specific risk appetite will help employees understand the risks your company is willing to take. As well, it will ensure that staff members in management have their views on risks and how to handle them aligned before an incident occurs, making the overall process more effective.
Integrate Risk Management Into All Decision Making
Risk management integration into a company’s decision making is a key part of creating a culture of risk management. Ensuring risk management is a vital part of planning and budgeting decisions, investment decisions, and core operational business processes helps an organization gain long-term advantage by allowing risk management to safeguard every step towards their goals.
Remember It’s A Continuous Process
While it is important to conduct risk management at the beginning of a project’s life cycle, it must also be done on an ongoing basis. At each stage of a project, new risks can come up that must be identified, quantified and managed. Risk management is not a one-time occurrence, and must be treated as a continuous process that grows and morphs along with a project.
Continuously Strive For Improvement
It is important that the continuous improvement of the risk management framework and the risk team itself is made a priority within the organization. Because of the transforming nature of risk as time passes, companies must ensure that their risk management programs are growing and developing along with the proposed risks, in order to continue managing them effectively.
Esther Chen is currently employed by Gedcor as a Junior Technical Writer. She is pursuing her BFA in Creative Writing at the University of British Columbia.