For some people, the term risk management invokes images of unexpected crises that disrupt your business, followed by an excited response. This occurs in all segments. However, the truth is, with proper risk management, it should rarely be that way. In reality, every part of your business conveys some degree of risk. A part of being an effective leader is the capacity to look forward, anticipate potential risks and consider how you can utilize your assets to address them.
Your risk management plan is not an emergency response plan. It’s a progressing part of your business strategy and is a persistent exercise you ought to attempt as you strategize, execute, and develop.
Here are a few key points to remember as you include risk management into your business strategy:
Create a Plan
“Planning” is simply another way of saying – “Think ahead.” Right now, while the waters are calm, consider conceivable storms emerging and how you should deal with them. Try not to hold up to be astounded – distinguish the risks beforehand, and ask yourself how you should react. Consider the personal, financial, and organizational assets you may need to keep the business in line with its technique.
Successful risk management is proactive, not reactive. We have all observed organizations that caught in the hold of reactivity, where activities have little relationship to general objectives, other than to stay alive. This approach is not part of a long haul mission. The risk management process – recognizing the dangers, considering the alternatives and making an arrangement – should be entirely proactive.
Recognize the Risks
Try not to trick yourself into supposing you can take out risks. You can’t. But, you can manage them. The initial step is to comprehend what a threat resembles. There are two useful activities in such manner: a “SWOT Analysis” and a “PEST Analysis.”
Conduct a SWOT Analysis
“SWOT” Analysis looks at your Strengths, Weaknesses, Opportunities, and Threats. Have your leadership group present their point of view for each of these regions.
Then take a gander at the list. Do you see those “Ws” (Weaknesses) and “Ts” (Threats)? You have just stepped toward recognizing the risks. In the same list, take a gander at the “S” and “O” sections. Those Strengths and Opportunities are certain variables that advance your objectives. Recognizing those elements is similarly essential in strategic planning.
Conduct a PEST Analysis
There is additionally a PEST Analysis – the Political, Economic, Social, and Technological components that influence your business landscape. You ought to have a thorough comprehension of these variables.
Assume you are a local transportation organization, serving individuals with extraordinary requirements. What will happen if a government agency chose to cut funding for those projects? Would your ridership drop extensively, or even vanish? Then again, what will happen if the government acquainted an incentive for individuals to utilize your transit services? Would you be able to deal with the expansion in ridership? Would a competitor go along and attempt to take a piece of the action?
Pondering these things early can make your strategy a little simpler when the time comes.
Set up your Response
For each risk, you recognize, evaluate it according to the earnestness of its potential impact. Is it a high, low or medium risk? Also, for each risk, consider possible actions and a number of assets you will use. Sometimes you may trust that your organization is sufficiently strong to deal with the impact. That is extraordinary. In those cases, you can simply acknowledge the risk. Then again, there might be risks that incapacitate your organization. Those risks warrant a lot of assets to avoid. In most cases, the risk will fall somewhere in the center – it can’t be kept away from or acknowledged – so your strategy should concentrate on relieving the effect.
Risk management is not a one-time workout – it’s a constant thing. Don’t simply consider it once, then proceed onward to something else. As a leader, it should always be at the forefront of your thoughts. Rely on an assortment of sources to advise you about the trends in your industry and the economy with an eye to spotting risks and overhauling your reasoning about them.
Take a Long-Term Perspective
Keep in mind – the road is long, so you have to keep a long haul perspective. You may experience risks along the way that set back your organization. But you need to acknowledge it as a part of the business condition and continue pushing ahead. However, also take it as an update that risk management is a necessary piece of business strategy and you ought to be placing it into your planning.
Does your organization consolidate risk management into your strategic plans? If not, then start incorporating it into your business plans.