What is risk management? What do you need to know to understand it and how do you allocate resources to it? Taking a risk management course or program teaches you what to consider, how to respond and what you can do to minimize your risk levels. Here are a few of the core tenets of risk management:
1. Identify the uncertainties and challenges of your business.
In order to minimize risks to your business, you first need to understand the uncertainties and challenges your business currently faces, or may face in the future. Managing risk before it becomes a problem is often more cost effective than dealing with the problem after it has occurred.
Knowing what to look for and understanding the consequences is an important component and is one of the first steps you can take to ensure your risks are minimized. Whether the risk is external or internal, you can build a process to stay ahead of the risk.
2. Determine how to allocate your resources.
Figuring out who will be responsible for each aspect of risk management is key. Having a clear understanding of the roles and responsibilities will make those people or groups accountable for managing their risks. From the top down, staff can effectively manage the anticipated consequences of the risk and in many instances, reduce the risk or eliminate it altogether. Defining the level of involvement of a particular department, group or individual gives clear purpose to those involved and ensures nothing will slip through the cracks.
3. Look for the positives.
Risk Management doesn’t have to be just about managing the negatives. By pro-actively moving forward with your risk management plans, you create a positive environment which can help you surpass your organizations goals and objectives. Effective risk management plans can assist you in growing your business.
4. Risk management isn’t the same for everyone.
While the theories and principles of risk management are the same, how they are developed and implemented will be different in every organization. There’s no cookie-cutter answer that can be universally applied. Each company has its own environment or culture and its own goals so what works for one company might not be the best solution for yours.
5. Establish a framework for managing risk.
Risk Management courses give you the fundamental tools and techniques you need to use as a framework for managing your organizations risks. You’ll learn how to build infrastructure for implementing your risk management strategies and be able to customize your plan to suit your specific needs.
6. Risks can come from any area of business.
IT and Cybersecurity are some of the more common risk elements for any organization. Operations, Finance and Accounting, as well as Business Development and Marketing or Sales all have risks associated with them and can cause issues if no one is watching.
As with anything, when there’s a human element, things can and do go wrong. Having an effective Risk Management plan in place goes a long way to ensuring that as much as possible, some of those risks are mitigated.