IN LAYMAN’S terms, risk management (in business, at least) is defined as the forecasting and evaluation of financial risks in conjunction with the development of measures to help minimise their impact.
Whilst this may be seen by some as yet another example of business jargon, research has shown that the presence of well-designed risk management plans can actively decrease project-related issues by as much as 90%.
In this post, we’ll look at the practical ways in which you can develop a risk management plan for your business going forward.
- Identify and Register Risk
This process starts with identifying risk, which is crucial if you’re to develop a comprehensive management plan that’s fit for purpose.
There are several steps to achieving this goal, as you first need to engage with relevant stakeholders in your business and discuss the key risks pertaining to every aspect of a particular project.
For larger and more complex projects, we’d also recommend that you liaise with a risk management and compliance expert such as Clifford Chance, who can provide in-depth advice and reviews across an array of different sectors.
Just be sure to document each risk and its potential impact too, as this creates a formal register that can be referred to at any time.
- Determine Key Risk Triggers
Once you have a clear understanding of the potential risks associated with a project, the next step is to identify the key triggers that should alert stakeholders in the future.
This should be managed by each department’s management team, who should assume responsibility for the risks that are relevant to their role in a particular project and ensure that any warning signs are recorded, processed and responded to.
This relies on expert input from those who work within your business, as there may be multiple (and occasionally subtle) risk triggers that are easily overlooked in some instances.
- Implement Risk Resolution Ideas
Finally, each of your management sub-teams and stakeholders will need to develop proactive resolution ideas that can be immediately implemented to offset a specific risk.
This may require a collaborative approach between different teams and departments, whilst you may also need to refer to risk reports from HR and finance in order to mitigate any impact throughout the business.
After all, the full impact of risk is often unknown and inherently neutral, so it’s important to work closely with other stakeholders throughout the business in order to implement effective risk management strategies.