In relation to Risk Management for any business, big or small, a failure to have risk management plans in place, as part of the management plan or corporate governance framework, is going to have an adverse effect on your business.
When written in Chinese, the word ‘crisis’ is composed of two characters. One represents danger and the other represents opportunity.
If you fail to plan, you are planning to fail!
Risks, or crisis, can lead to both positive and negative impacts on your business; however, if you are reactive or lacking a plan, you will likely make poor decisions in the moment or fail to see the opportunity among the chaos.
There are a number of benefits to good risk management such as:
- The cost of risk planning and management compared to the costs of an accident or incident, both financially and psychologically, are significantly less.
- Consideration of risks to strategic and operational systems within the organisation, allows alignment between management and employee focuses and ensures that strategic goals and operational systems are secure.
- After considering the risks and planning to avoid or mitigate them, there is a greater likelihood that the planned operational and strategic goals will be achieved.
- Being proactive and having a risk management plan means that, when faced with a risk or crisis, minimum energy can be used to implement the plan, which in turn reduces the business downtime.
- The risk management plan will have an inbuilt structure for decision making which allows for evaluation and treatment of the risk in a way that promotes confidence in the management and staff of the business.
- Ability to promote business resilience to stakeholders and potential investors or purchasers.
- Certainty for management in relation to information received from all parts of the business. Risk management includes employment infrastructure and, therefore, allows the effective delegation of responsibility. This employment infrastructure allows for the measurement of performance and risk minimisation within the employment infrastructure.
