Importance of risk management team

The uncertain economic times of the past few years have had a major effect on how companies operate today. Companies that used to operate smoothly with the help of forecasts and projections now refrain from making business judgments. Today companies have a renewed focus to manage risk, most have created chief risk officer positions.

Risk is the main cause of uncertainty in any organization. Thus, companies increasingly focus more on identifying risks and managing them before they even affect their business. The ability to manage risk will help companies act more confidently on future business decisions. Their knowledge of the risks they are facing will give them various options on how to deal with potential problems. Risk management is important in an organization because without it, a firm cannot possibly define its objectives for the future. If a company defines objectives without taking the risks into consideration, chances are that they will lose direction once any of these risks hit home.

All businesses face the risk. Unexpected events, such as a natural disaster, loss of funds through theft, or injury to staff, customers, or visitors on your premises, could impact operations. Any of these events can cost your organization money or cause business closure. Risk can be caused by internal and external sources. The external risks are those that are not in direct control of the management. These include political issues, exchange rates, interest rates, and so on. Internal risks, on the other hand include non-compliance or information breaches and operational risk among others.

My ideas provided here will assist your organization in managing its risks across a range of areas. A risk management plan can be applied to areas such as human resource management, control of your organization’s stock and property or choice of insurance policies. In fact, risk management principles can be applied anywhere that a risk exists. Company risk management plan will need to be regularly reviewed and updated. Risks, and the strategies available to manage them, change over time.

Risk management is a management committee responsibility. As a first step, the management committee can form a small working group to develop a risk management plan. To ensure that the broad ranges of interests within the organization are considered, the working group should include at least one staff member and one member of the management committee. While the working group will be responsible for developing the risk management plan, the management committee should oversee the process and make the final decisions required to implement the plan.

In recent years, many companies have added risk management departments to their team. The role of this team is to identify risks, come up with strategies to guard against these risks, to execute these strategies, and to motivate all members of the company to cooperate in these strategies.

Look around your work place. What potential risks can you find? Look at the workplace from the perspective of the different people who use it. Are there hazards for children, older people or people with impaired sight? What are the fire hazards? Are there loose electrical connections, or damaged furniture? How hot is your hot water, and how accessible is it to children? Take some photos, perhaps even a video if you can, and study it closely. It is a good idea to have a couple of people do the site inspection, so that you can compare notes.

The activities carried out in your organization will have varying degrees of risk. Do staff members work with potentially dangerous clients? Is staff required to perform physical activity which may result in injury? Is your organization’s work particularly stressful? Review your work practices from the perspective of other people who use your service. Are clients exposed to risks from other clients, people off the street, or from other sources?

Your organization may be exposed to a number of legal risks associated with issues such as workplace health and safety, liability to clients, judiciary duty or anti-discrimination legislation. Remember, many laws require strict compliance and their prescriptions must be met as there is no option to just accept the risk of being detected by regulators. You must comply with the law.

Purchasing the appropriate insurance coverage for your business is an important part of your risk management plan, but it’s not enough by itself.

You still must have policies and procedures in place to reduce risks to ensure your assets, reputation, financial security and operations can continue without interruption. Insurance companies may view your organization more favorably if you can prove you have a stable risk management plan in place to minimize the impact of potential claims. It could even help you qualify for reduced insurance premiums.

Communication and consultation are important considerations at each step of the risk management process.