6 effective ways to make your company’s risk management better
Date : Aug 18, 2020
So, follow these 6 tips to make that happen:
- Make sure everyone understands rules and responsibilities – In any business, it is important to know who is responsible for which activities. It becomes easier to measure accountability then. To ensure thorough corporate compliance at all levels, you need to clearly decide who will develop policies or regulations. Business managers should be asked how they exactly plan to achieve company goals and why their risk assessment is accurate. While implementing any rule, inconsistencies or gaps need to be detected and examined.
- Identify and see risks for what they are – Start thinking about possible risks as early as possible. It will help you to stay better prepared. Decide on EWIs or Early Warning Indicators that can help you identify risks sooner than later. All work processes should incorporate these indicators so that no department or team is unaware. Also, it is crucial to keep a positive mindset. Risks might not be negative necessarily. They might open up new opportunities for you.
- Promote the right culture and smooth communication – To improve risk management, the senior managers as well as their teams should try to learn from past mistakes, rather than engage in a blame-game. An open culture that encourages clear and unbiased communication can go a long way to ensure this. Everyone should be made aware of how much deviation is acceptable from the predefined objectives. Managing stakeholder expectations is something that should be discussed at all levels.
- Manage risks with the right strategies – Depending on the type of risk your company is facing, it can be tolerated, transferred, treated or terminated. If a risk is tolerated, you don’t need to reduce it, though monitoring is required. In case a risk is transferred, a group or individual can be assigned to take responsibility. To treat a risk, you need to take actions that decrease the probability of the risk or its impact. And to eliminate a risk completely, you might have to change major practices or processes.
- Offer adequate rewards for the right efforts – It goes without saying that mitigating risks and achieving ambitious goals can be challenging and exert a lot of pressure on managers. This is the reason why timely promotions, bonuses, acknowledgements and reasonable compensation packages can help. By paying the right remuneration, you can mold employee behavior, engagement and their interest in accomplishing company objectives with minimal digression.
- Be thorough with documentation and reviewing – One of the most important aspects of improving risk management is proper documentation and periodic reviewing. Make sure you have collated all risks in one place, so as to assess your company’s overall exposure. During documentation, don’t forget to note who is responsible for which risk. Also, the risks a business faces keep changing over time. Old ones often become weak, while new ones crop up. Hence, you should monitor your risk exposure regularly and train your workforce accordingly, so that everyone is in line with your risk management ideals.
All in all, the above tips can be very useful to improve your organization’s risk management structure and enhancing the bottom-line. You can always hire a reliable firm offering management consulting services for detailed guidance and the best results.