The Risk Management Course of Action

Many businesses have failed and have gone bankrupt because they were not able to foresee or manage a crisis that came their way. There is actually a specific procedure on how to handle a risk or crisis if they should ever occur.

When talking about risk management, it is important to realise that risks and crises do not just occur by individuals. They can occur from a failure in a certain business function, process, and procedure or due to a natural disaster. When and if something goes wrong, it is important to have a course of action that can be taken to steer the company out of any potential danger.

In actuality, the risk management process is a continuous one. It requires careful planning and examination of a problem, what can be done to resolve the problem and setting up processes to ensure that they do not happen again.

Below are the five essential steps that all businesses should consider and review when creating a risk management plan.

Identify the Risk

The first thing that should be done when creating a risk management plan is to identify the risk. Identify the possible flaws and sources of risk within the organization. This may not be an easy task, especially if the company is large.

However, the simplest way to identify possible sources of risk is to talk to all the employees in the organization, look up all the blue prints and procedures of any emergency, do a SWOT analysis and just look around to see where things can go wrong.

Analyse the Risks

Once the risks have been identified, the risk management official needs to evaluate them according to seriousness and then prioritize them accordingly.

The risks that have can have a very significant impact on the organization’s well being should be ranked higher than other risks that have been identified. Analysis of the risks will allow the organization to understand the most important flaws of weaknesses of their organization.

Decide On a Course of Action

Once all the risks have been identified and analysed, it is important to decide on a course of action. By course of action, we mean decide on the processes and functions that will be undertaken and followed should the crisis or risk present itself.

It is essential to choose the best possible strategy according to the organizations needs and requirements. Make sure that the time and cost requirements are considered during the process.

Review the Course of Action

Like all major decisions, risk management plans need to be reviewed for consistency and flaws. Once the plan has been created, it should be reviewed to ensure that it is realistic and foul proof. Of course there will be some degree of imperfection but everything in the power of the company should be done to limit the problem.

Create Awareness about the Plan

This is very important. Most businesses do not communicate their plans to other members within the organization. If they do not know about the plan, how can they follow it if a crisis should occur? As a result, it is important to communicate the plan so that everyone is aware of what to do.

By keeping the five factors mentioned above in mind when deciding on a course of action for a company’s risk management plan, an organization will be able to minimize its costs and focus on only the most important processes.