In our time, a company without risk management can hardly survive in the marketplace. For those still unfamiliar with the term, Risk Management is a set of activities aimed at managing and controlling a company against potential threats. This goes from planning and use of human resources to materials purchased to prevent hazards or handle them.
The final idea behind all this is an ongoing improvement of company processes, in order to leverage business activities. We have already addressed such topic recently in this blog; to read the post, just click here.
Many companies have already understood the alert sign on the importance of this management model; however, some still don’t know how to conduct it effectively.
In this post, you can take a look at the key steps to succeed in corporate risk management.
Key steps for corporate risk management
Usually, companies have specific departments in charge of this kind of management. They have the task to map possible threats and develop prevention strategies. Additionally, they are responsible for putting the plans into practice and stimulating all employees, so everything happens as planned.
There are 5 key steps to do a good planning:
You must know the whole company to map possible risks. You must understand the company’s weaknesses and vulnerabilities, and must even know in what stage the company currently is – if it’s maturing, or in the phase of growth, expansion or consolidation. Once established these points, it will be easier to identify, understand and analyze the risks.
2- Qualitative analysis
After mapping the risks, it’s time to listen to company managers, in order to understand the processes and activities of each sector. Through a qualitative analysis, the importance level of each risk can be defined, along with the chances of it actually coming true.
3- Quantitative analysis
This step consists of investigating, through data and numbers, what are the potential impacts and effects that identified threats can have on the company.
4- Response planning
Now it’s time to list the risks in order of importance, to develop a prioritization scale. The idea is creating such scale from the highest impact and probability levels to the smallest ones. Then you must create a plan to track and eliminate threats. Defined troubleshooting methods must be specific and based on facts.
This is the last step. At this time, you must monitor if the prevention processes are being implemented, and analyze how the risks are behaving. There are several tools that can assist you in this task, generating systematic controls, reports, performance indicators, control mechanisms, etc.
With these 5 tips, you can structure and implement a good risk management for your company. And if you have any more tips to propose, please enter them it in the comments area, and help us improve this post even further. 😊
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