4 Risk Management Guidelines for Your Business
Risk management is one of those things in business that may cause people to think of disasters or crises, causing everyone to panic and scurry about to rectify whatever the problem is. However, it really does not have to be, or even thought of in this way at all, especially with proper risk management. The thing is, any business will always have risks attached to it in varying degrees.
As a leader in risk management, the thing to do is to try and envision these risks and how to deal with it, If it does transpire, steps should be put in place to try and address the problem with the necessary resources available. Risk management should be a continuous business process as the business grows. In order to incorporate risk management as part of an ongoing business strategy, here are some things you need to know.
1. Always Have A Plan
In business, you should think and be like a chess player. You need to think ahead and have plans that should be ready to be executed should anything unfortunate occur. Supposing at this moment in time, everything is going well, you have to think of possible situations where things could go wrong and what you would do in such situations.
If a problem suddenly hits, you will be taken aback, so plan ahead in order to be ready and not be surprised. If you can identify certain risks, then you already have a certain set of moves ready to go to counter it. Consider all the resources at your disposal and how to keep the business steady using these resources.
2. Be Proactive, Not Reactive
To be effective in risk management, you need to be proactive and not reactive. When things go wrong, everyone is in a frenzy, reacting to the issue in order to stay alive. While this may (or may not) get you through, it is by no means a long-term solution. Being proactive means you need to identify the various threats and have several options as a result of planning ahead.
3. Identifying Risks
One thing that needs to be made clear is that you cannot eliminate all risks. This is practically impossible. However, what you can do is to be in a good position to manage them. To do this, you need to understand what risks look like. A couple of exercises known as a “SWOT Analysis” and a “PEST Analysis” is helpful in this regard. A SWOT Analysis is a detailed inspection of strengths, weaknesses, opportunities and threats. This exercise helps identify weaknesses and threats. The strengths and opportunities promote your goals and aids in strategic planning.
A PEST Analysis (an acronym for political, economic, social and technological) allows the decision-makers in the company to understand any changes that are happening in a particular market. This can help make better marketing decisions and in fact, better business decisions all round.
4. Preparing Responses
Consider the risks and the possible impacts. Be able to identify them as low, medium and high risks. With each risk, consider the possible actions to take with the available resources at hand. On many occasions, the risks tend to be in the medium category.
Risk management is an ongoing thing and not a one-time exercise. Taking risk management courses is recommended for optimal results. Think in terms of long-term planning. Risks are part of every business and risk management is a vital part of business strategy and you should continue to always keep planning and having strategies in place.