Whether crossing the road, investing in financial products or choosing your lunch, life is full of risk. You can't remove it, but you can contain or mitigate it.
A survey identified the biggest operational risks facing companies, with many of the biggest concerns relating to compliance: adhering to data privacy laws, inability to deal with cyber threats, regulatory change and scrutiny of operational resilience, products and services.
Our 10 top tips on how to improve risk management:
Be clear about your remit
Identify risks early on
Be positive
Describe risk appropriately
Estimate and prioritise risk
Take responsibility and ownership
Learn from past mistakes
Use appropriate strategies to manage risk
Document all risks in a register
Keep monitoring and reviewing
Risk is inherent in everything we do: skills shortages caused by a failure to fill vacancies, a drop in currency value because of market uncertainty, fines and financial risk due to a failure to comply with regulations.
Indeed, whole industries, such as insurance and gambling, are founded on risk management. Because of its evolutionary nature, risk can change, as can our perceptions.
A global C-level survey identified the biggest operational risks facing companies, and many of the biggest concerns relate to compliance:
Risk management involves understanding and analysing risk to ensure organisations meet their objectives in the corporate world. So, how can you improve risk management in your company?
For starters, build a strong risk culture. This involves conducting effective workplace risk assessments, developing a risk management plan, improving employee engagement in risk management practices, and creating a risk strategy. Then, incorporate the following top tips.
Gaps in responsibilities across your organisation increase risk. Ensure everyone knows exactly which part of the business they’re accountable for and which activities and tasks.
It's never too early to start thinking about risk. The sooner you do, the easier it is to manage. Think about risk management at the outset of every project or task. What early warning indicators (EWIs) can you track for different risks? Embed risk management into your work processes and corporate culture.
Not all risks are negative, so don't only focus on the downsides. They can also be positive, presenting opportunities and enabling you to take advantage of a given event or situation.
As part of the risk assessment process, creating a risk 'string' is good practice to distinguish between cause and effect. Also, describe risk appropriately and clearly to all employees.
Use a matrix to assess and prioritise all known risks. You can calculate risk severity by looking at the probability (likelihood) and impact (severity).
If you see something is wrong, such as a potential safety issue, suspected fraud, or a security breach, take responsibility rather than waiting for someone else to deal with it. Risk management works best when everyone is empowered to speak out and take action.
That said, employees may exhibit non-compliant behaviour for several reasons: deliberate, unintentional, personal red flags and vulnerabilities in job roles.
Use historical data and anecdotes to learn from past mistakes and ensure they’re never repeated. Past trends can inform better decision-making going forward.
Use the 4Ts model to decide how best to manage risk. This involves:
Terminating risk – Altering processes or practices to eliminate it
By capturing all risks across the company, you’ll see the bigger picture of your entire exposure, improving your information sharing and accountability. Remember to document who’s responsible for what and appoint a risk owner, too.
The level of risk you face is continually changing, with new ones emerging and others becoming less critical.
By being proactive and regularly monitoring your exposure, you’ll be ready to act when the time comes. So, it’s important to have a risk management process in place.
Part of that requires risk management training, not just for leaders, but everyone. Staff need to learn how to recognise what constitutes risk so they can help manage it.
Effective risk management can help you identify potential problems earlier, reduce losses, support better decision-making and improve business resilience. It can also assist organisations to meet regulatory and compliance requirements.
A risk management framework is a structured approach to identifying, assessing, managing and monitoring risks. It provides a consistent way to understand your exposure and determine how to address risks.
Risk assessment focuses on identifying hazards or risks and evaluating their likelihood and potential impact. Risk management is broader, covering the processes and controls used to respond to, monitor and review those risks.
If you’re looking for focused training, browse our risk management courses – we offer a complete solution for your compliance programme, including IIRSM-approved modules. Our topics include:
Our e-learning courses are designed to engage employees, including our microlearning library, which supports knowledge retention.
Our Compliance Portal also features a range of tools to digitise and automate your compliance learning. These include our:
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