Amid the continued uncertain market conditions around the world, organizations are now focusing their attention on risk mitigation. As many can attest, early identification and curtailing of factors that could have a negative impact on operations has never been more important.
Risk has no bias — it's a problem faced by both public and private sectors. While each has a different perspective on the challenge, the aim of protecting staff, clients and citizens is consistent across the board.
For public sector organizations, risks can include the emergence of unforeseen events such as natural disasters or even a global pandemic. Services to citizens need to be maintained even when staff are unable to work from their usual offices. Private sector organizations share many of the same risks, but with the added complexity of needing to make a profit. Keeping a lid on costs, ensuring staff are safe and prioritizing customer satisfaction is no easy feat.
The Link Between Risk and Process
Across all organizations, there is a close link between risk levels and business processes. These processes include everything from onboarding new hires to maintaining supply chains, completing financial transactions and delivering services to customers or citizens.
It can be tempting to think that the best way of reducing risk is to undertake a wholesale review of all processes and make significant structural changes across the board. However, experience shows this is not always the case.
For many organizations, a better approach is to avoid big-bang projects and instead take a more staggered strategy. In this way, particular risk areas can be identified, and then remedial work carried out on the processes involved in those areas. This will generate short-term results before activity is rolled out more widely, while slowly but surely building your base of advocates who support the change.
Many organizations also need to put in place a suitable method of monitoring and managing risk. Often, groups are all too reliant on things such as Excel spreadsheets in which risks have been recorded. However, such an approach is not scalable, doesn’t update all affected parties in real time, and increases the chance that critical risks may go unnoticed until problems arise.
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An Effective Approach to Risk Management
Organizations of all sizes need to take a systematic approach to the task of risk management and mitigation. Being proactive and strategic about business risk is a vital part of ensuring operations are as robust and resilient as possible.
The stages in the risk management approach include:
- Identify all risks: The initial step is to examine the entire structure of the organization and identify all current risks. Involve groups of staff from all areas who have direct oversight of certain factors that may otherwise go unnoticed.
- Score each risk: Once all risks have been documented, assess each one to determine how significant they are. This allows them to be scored and weighted so that time and resources can be allocated to the most serious risks first.
- Evaluate processes: For each area of risk identified, examine the processes that support that area. Evaluate how each process relates to each risk and where changes may be required. Involve team members who execute these processes for less obvious nuances.
- Undertake mitigation: Once relevant processes have been identified, take the steps required to reduce associated risks. This could involve redesigning the process with the help of impacted teams who have intimate knowledge of the process and can suggest alternative solutions or, in some cases, removing the process altogether.
- Ongoing auditing: To ensure removed risks do not reappear, ongoing auditing is an effective way of monitoring your risk status. Conduct regular reviews to determine how existing risks are tracking and whether any new ones have emerged.
By taking a methodical approach to risk and process management, organizations can ensure they are best placed to deal with challenges when they arise. Risks can never be totally eliminated, but effective monitoring and management can ensure their impact is minimized, thereby ensuring the success and satisfaction of your staff, clients and citizens.
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