Risk Management Process
Why a risk management process is recommend for businesses?
Contact us to arrange a free 15-minute consultation with one of our risk management experts. Appreciate how risk management framework can add value and reduce costs to your organisation.
What is a risk management process?
A risk management process is the framework of identifying, evaluating and controlling potential threats to the business. It will consider different strategies to address exposures within a tolerance level acceptable to the business. Understand how a risk management process can prepare your business for the unexpected. Improve your risk profile to ensure you can purchase the most appropriate business risk insurance.
An effective risk management process will utilise business insurance to transfer risk
Talk to an insurance broker today about your business needsHow does a risk management process work?
1. Identify your risks
The first step of a risk management process is to investigate and detail risks that might affect your business or objectives. There are a number of risk management tools available such as risk assessments and risk reviews that can assist with identifying and recording risks.
2. Analyse and measure
The second step of a risk management process is to determine the likelihood and consequence of each risk. By evaluating each risk, it is possible to quantify the potential to impact your business or objectives. A risk register is a valuable risk management tool to record and score the potential risks.
3. What is unacceptable
The third step of a risk management process is to take decisions concerning which risks are unacceptable compared with your risk appetite. Risks that are acceptable should be monitored and reviewed on a regular basis. Whereas risks that are unacceptable should either be avoided, reduced or transferred.
4. Mitigate or transfer
The fourth step of a risk management process is to action risks that cannot be avoided should either be reduced or transferred to an acceptable risk tolerance level for the business. You should consider ways to mitigate the exposure by transfering unacceptable risks from your balance sheet.
5. Contingency planning
The fith step of a risk management process is to consider risks that cannot be managed. If your initial plan to control the risk fails, what is your plan B? For example, in the event of a cyber breach, what are the steps to effectively respond and mitigate the impact after the incident has occurred?
6. Monitor and review
The sixth step of a risk management process is to continually monitor, review and report on risks to your business and objectives. The risk management framework does not finish once the risks have been identified, analysed and controlled. Your business and its objectives will continue to be exposed to new and emerging risks.
Why is risk appetite an important part of the process?
Part of the risk management process
When risk appetite is clearly understood and communicated, it becomes a powerful tool not only for managing risk but improving performance. An effective risk management process can protect your organisation against financial shocks, improve decision making and optimise operational efficiency.
Does our business need a risk management framework?
A risk management framework will identify and manage risks that can prevent the business from meeting its strategic objectives. Whereas, insurance for business is an effective means to transfer unacceptable risks.
Mistakes and accidents will invariably occur and can be very costly and time consuming. Considering what risks have the potential to throw your business off track, could mean the difference between success or failure.
The key to a risk management framework is understanding what pitfalls your business is exposed to. Arrange a call back and one of our specialists will then give you a free 15-minute call to discuss your needs.
What risk management process tools are available?
The below are commonly used risk management process tools to monitor and report on risks within your organisation:
Risk Assessments
Are completed per activity, with the aim to identify hazards and risk factors that have the potential to cause a harm and evaluate the risks.
Risk Register
Identifies key areas of risk in terms of potential frequency and impact, highlights issues that require attention and allocates responsibility.
Business Continuity Planning
A business continuity plan will be business specific and identify responsibility with a crisis management hierarchy should an incident occur.