Risk Management Program? It's Easy If You Do It Correctly
Risk can severely impact your ability to operate or grow the organization. Whether it’s implementing a new technology, managing business operations, or ensuring ongoing compliance - risk is in everything we do. Yet, very few organization have an effective Risk Management Program (RMP).
Why implement a risk management program
If implemented correctly, a risk management program minimizes risks, optimizes opportunities, and enhances business value. Key benefits include:
Enhance decision making by establishing a clear link between objectives and risks
Align business activities with growth strategies
Reduce blind spots by creating an avenue to communicate risks
Support compliance with various legal requirements
How to implement a risk management program
Step 1: Get buy-in from key stakeholders
Like any major organizational change, the risk management program cannot get very far without buy-in and commitment from the board, management, and staff. This sets the tone and emphasizes collaboration and input from individuals across the organization.
Step 2: Establish a risk management framework
Risk is context dependent. What works in one context doesn’t in another. This is why it's important to establish a framework that:
aligns with your specific strategy and goals
establishes a common language that is accessible to everyone in your organization
provides a frame of reference for prioritizing and managing risk
There are various generic risk management frameworks such as ISO 31000 and COSO ERM Framework that can serve as a great starting point. However, I recommend creating one that is unique to your organization and goals.
Step 3: Perform risk assessment
A functional risk management framework requires three key activities:
Risk identification - gathering perspectives from people on the ground goes a long way to understanding what risks could have the most significant impact on the organization.
Risk Analysis - bring together key personnel to evaluate risks that may impact the overall strategy and mission of the organization.
Action planning - the ability to manage risk effectively depends on the organizations capacity and willingness to act on the risk information gathered. You have to take action.
Step 4: Monitor and reassess frequently
Risk management is an active process. To be effective, reassess risks at regular planned intervals and especially when there is significant change to key risk factors (i.e., organization, threat landscape, vulnerabilities, etc.)
Whether it's exploring a new opportunity or technology; managing current business operations; or ensuring ongoing compliance - risk management can help you think of the bigger picture and the effect activities have on the business.