Creating an Effective Risk Management Plan
Regardless of the industry you operate in, every organization is confronted with various risks, which can originate from external or internal factors, have localized or global implications, or be related to cultural or financial aspects. To ensure these risks do not catch you off guard, it is crucial to develop a comprehensive Risk Management Plan that enables your organization to navigate them effectively.
To initiate the process of crafting your plan, the first step is to pose the following questions to yourself and your team:
- We monitor all risks, even when they seem minor.
- Employees are comfortable speaking up about risks.
- We have a thorough process for deciding how to respond to potential risks.
- There is wide agreement about how much risk we are willing to take.
- How we handle risk is consistent and predictable.
By conducting a thorough examination of these five aspects of your organization, you will have completed the first two steps to creating your Risk Management plan: Identify and Assess Risks and Evaluate Risk Impact and Probability. It’s important to note that each organization’s path toward effective risk management will be unique, shaped by its industry and responses to these crucial questions.
After identifying and evaluating your organization’s risks, there are an additional three steps for you and your organization to take in making your Risk Management Plan.
- Develop Risk Mitigation Strategies
- Implement and Monitor Risk Controls
- Review and Improve
These three steps utilize the information and data you have gathered in steps one and two. Each one builds off the last. By utilizing your risk data, you can develop and implement preventive measures, establish controls, transfer risk through insurance, or develop contingency plans. Risk management is an ongoing process that will benefit your team, organization, and bottom line. Creating a Risk Management Plan can be a daunting task due to its importance to the health of your organization.
Fortunately, you do not have to embark on this journey alone.
The list above comes directly from Denison Consulting’s Risk Management Assessment, a tool used by organizations to measure benchmarks of an organization’s Risk Management Strategy. Denison’s distinctive approach combines risk management planning with cultural insights to help organizations gain a deeper understanding of their risk management plan.
To learn more about developing and implementing a risk management plan, connect with the team of experts at Denison here.