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How to improve and standardised your approach to risk management

Which are the risks that every industry face

Every industry whether it is the legal industry, the health care industry or the information technology industry is at risk and as such each and every industry need to find ways and implement measures and strategies to reduce the risk. This is why every company or organization in any industry must invest in risk management. Risk management is a continuing process which identifies, analyzes and evaluates potential risks and have a well-defined plan in place to mitigate the adverse effects of loss as a result of risk. There are four main types of risks that industries suffer from. These are financial risks, operation risks, perimeter risks and strategic risks.

Financial Risks – Cost of claims

Operational Risks – Labor Strikes

Perimeter Risks – Weather or political change

Strategic Risks – Management Change

As stated earlier, every industry faces a certain amount of risks so if you are to be successful, you must be able to recognize the risks in your industry and manage those risks as much has possible. It is recommended to work out a standardized approach towards risk management so that you can manage every aspect of the process properly to ensure that the desired results are achieved. 

How to standardize your approach towards risk management

Identifying and assessing the risk.

Every risk management process starts with this step. If you do not know what your risks are, you will not be able to work out a strategic plan to properly manage them. 

 

Ranking the risks by order of magnitude.

You must be able to measure the risk in order to manage it. 

 

Recognizing that risks are interrelated.

This will help you to identify, quantity and mitigate risks better. 

 

 Committing adequate resources to the risk management process.

Adequate resources should be committed to risk management if it is to be done in the most efficient and cost effective manner.

 

Reassessing risks continually.

Based on the fact that things are constantly changing, you need to continually reassess your risks as they are continually changing. 

 

Reviewing the costs of risk mitigation

Risk management is an investment and has a lot of costs so it is important that you review these costs on a continuous basis to ensure that you remain on budget.  

 

Creating a risk aware culture in your organization

You should make sure that your organization or business is educated in risk management and that they develop a culture of risk awareness. One way of accomplishing this is through frequent risk management incident reporting which is discussed with all relevant parties.

Improving Risk Management by Building a Strong Defense

In today’s digital age, we are more at risk than ever before. Almost every business that has an online presence is at risk of corporate cyber breaches resulting in the loss of confidential information which in turn result in financial and reputation damages for a business. Online businesses and organizations need to be constantly on guard because cyber-crime is continuously evolving. Every online business is a target and as a result one of the best ways of improving risk management would be to reduce the risks of a cyber attach by building an effective defense. You might not be able to eliminate every cyber risk but by having a strong defense in place, you can protect yourself against many attacks. There are a variety of services, companies and risk management solutions available on the internet that can help you to build a strong defense against cybercrime.

If we take the health care industry for example, we see that improving safety and reducing risks in this industry is challenging; however, this industry is constantly expanding healthcare capabilities by investing in systems that can manage the risks faced by this industry. Such risk management investments make it easier for companies in the health care industry to deal with potential risks and result in solutions that improve the services offered to patients.

Benefits of Risk Management

Investing in risk management is an investment which will definitely yield results. If not today, sometime in the future and that is the moment when you will be most thankful that you invested time and effort into identifying, assessing and evaluating potential risks and having a standardize plan in place to manage these risks. Implementing a risk management program has a variety of benefits. Below are a few of them.

You will see the risks that are not apparent. 

You will provide valuable insights to management which will make it easier for them to make decisions.

You will be able to build a better defense.

You will reduce the business liability.

You will provide greater insight to indemnity, insurance and liability issues.

 

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