Establishing, running, and growing a business entails a variety of risks. Risk is a reality for all business owners and managers, regardless of industry or size. On the other hand, by developing a risk management plan that ensures preparedness for any obstacle to the business or organizations, it is possible to strike a balance between taking risks and minimizing them; failing to do so can lead to business failure or damage its reputation.
What is Risk Management?
The risk management plan can be represented as a document that can identify all potential risks of the project, calculate its close and distant dimensions, and develop an accurate assessment of its occurrence, drawing on the project’s type and idea. (London Premier Centre, 2022)
Risk management program is one part of the business continuity plan that will most likely be used because it is an “ongoing audit process” aimed at preventing or mitigating potential crises. The need to implement a crisis response plan and business continuity strategies is determined by the strength and efficiency of your risk management program.
Components of the Risk Management Program
The book Your Plan is Your Parachute by retired FBI special agent Jacques Island, identifies the main components that the Risk management module normally includes:
Risk Assessment
It is the overall process or method of hazard identification or identifying risk factors that have the potential to cause harm, analyzing and evaluating the risk associated with that hazard (also known as risk analysis and risk evaluation), and determining the most appropriate ways to eliminate the hazard or control the risk when the hazard cannot be eliminated (known as risk control).
Risk Mitigation Strategies
It is a strategy for preparing for and mitigating the negative effects of risks, catastrophes, or crises that may put a business at risk. Risk mitigation, like risk reduction, takes actions to mitigate the negative consequences of risks and disasters on business continuity (BC).
Early Warning System
Early warning systems are primarily used to detect crises prior to causing harm and to reduce false alarms of potential crises. In a firm, an EWS is the collection of capabilities required to develop and disseminate relevant warning information, allowing at-risk individuals, communities, and organizations to plan and respond effectively and in sufficient time to minimize injury or loss (adapted from UNISDR 2009 and others).
“If you don’t invest in risk management, it doesn’t matter
what business you’re in, it’s a risky business.”
– Gary Cohn
Set an appointment for a free consultation at www.inquesta.com to assess your business risks, provide you with risk mitigation strategies, and the best early warning system for your company or organization.
Rose Marie Quintos is a Publishing Assistant and the Marketing Director for Quest Publishing,a division of the Inquesta Corporation. (She can be reached at rquintos@inquesta.com.)
