Risk Management Tips, Quotes, Tools

business risk

Running a business is not a smooth process, given the amount of risks it is faced with. A business must have a risk management plan in place and be prepared for delays or shortages in inventory, natural disaster, intentional or unintentional activities, loss of labor or skilled staff, obsolete products, ever-growing competition, and workplace injury liability, among other types of risks. Risk management is therefore an important part of running a business smoothly.

“Business people need to understand the psychology of risk more than the mathematics of risk,” says Paul Gibbons.

Risk Management Quotes

1.       “If you don’t invest in risk management, it doesn’t matter what business you’re in, it’s a risky business.” – Gary Cohn

2.       “The key to risk management is never putting yourself in a position where you cannot live another day.” – Richard S. Fuld

3.       "All courses of action are risky, so prudence is not in avoiding danger (it’s impossible), but calculating risk and acting decisively. Make mistakes of ambition and not mistakes of sloth. Develop the strength to do bold things, not the strength to suffer." – Niccolo Machiavelli

4.       “If you do not actively attack the risks, they will actively attack you.” – Tom Gib

5.       “I have learned that nothing is certain except for the need to have strong risk management, a lot of cash, the willingness to invest even when the future is unclear, and great people.” – Jeffrey R. Immelt

6.       “The question of whether or to what extent human activities are causing global warming is not a matter of ideology, let alone of belief. The issue is simply one of risk management.” – Malcolm Turnbull

7.       “Knowing our risks provides opportunities to manage and improve our chances of success.” –

Roger VanScoy

8.       “Risk is like fire: If controlled it will help you; if uncontrolled it will rise up and destroy you.” –Theodore Roosevelt

9.       "My concern with risk management is that many (not all) risk professionals are trying to redefine risk management to make it something broader than it actually is." – Michael Rassmussen

10.   “Risk management is a culture, not a cult. It only works if everyone lives it, not if it’s practiced by a few high prices.” Tom Wilson

Risk Management Tips

Effective risk management is a critical element of running a successful business. Prior planning will ensure that you are well-prepared to take on risks head on. This can save you from big losses. Managing risk is thus an important part of business, and planning for risks before they occur is often the easiest way to do this.

Here are a few risk management tips:

1.       Assess and identify risk: Risk is everywhere in business. Identifying potential risks to your business is the first step in risk management. Assessing and identifying risks can help you prepare ahead in time so you can effectively manage them. When it comes to assessing risk, you may try to find answers to a few questions:

ü  What can go wrong

ü  What needs to be done in such scenario

ü  Is the risk major or minor

ü  How you can prevent it

Consult experts, re-assess your project plan, and explore previous project plans to ascertain that your list of probable risks is complete.

2.       Prioritize risk: Once you have identified potential risks to your business, it is time to put the priority tags on each risk on the basis of their probability of occurrence. You may want to establish a probability scale to assess the seriousness of each risk, such as

ü  very likely to occur

ü  little chance of occurrence

ü  very little chance of occurrence

It is also important to measure risks by the possible impact they could have on your project goals. First, mark those that have a potential to influence biggest losses and gains. Which risks have the highest probability of occurrence?

3.       Re-prioritize risk: Market conditions change, situations change, and so do risks. Effective risk management is the ongoing assessment and reevaluation of risks. Make it a recurring process. The risk identified will vary from one project to another. Sometimes what may be assessed as less important initially might be seen as more serious at the organizational level as the wider picture becomes clear across multiple projects.

4.       Review risk register regularly: Make sure you review the risk register every week. Gather input from team members regularly. This will help train them in risk management and prepare them for tomorrow. Periodic reviewing will help you identify new risks. Update your risk checklist with any significant changes in the project.

5.       Review the cost of mitigation: Risk mitigation should be based on the principle that the cost incurred in prevention must be within your reach and for less than the cost the losses would befall on you. This will endow you with a capacity to sustain, fight back, and lower the losses in the eventuality of any risk. This will also enhance your propensity to manage your risks more scientifically and more effectively following suitable calculation.

6.       Implement risk responses: After identification and analysis of potential risk, the next step is to take action as per plan and implement your response. With the right response implemented at the right time, you can openly communicate the potential risk threat and its prevention to your entire team and thus take adequate steps to avoid unexpected risk or minimize its severity. The best risk management strategy will assess the impact of risk and the outcome of the steps taken to determine what worked and what didn’t.

7.       Reduce exposure, reduce risk: When you are aware of potential risks, it would be a good idea to reduce the exposure to risk. By doing so, you are likely to reduce the level or intensity of risk. In fact, risk awareness can help you take steps that will reduce exposures both in the present and future.

8.       Create a risk awareness culture: Effective risk management is more about educating the team in its practical aspects. It is a business process that must be dictated clearly to the entire staff so they all embrace it, making risk management responsibilities aptly clear to everyone. However, it would be a mistake on their part to assume that the manager is taking care of everything. Training and awareness building can result in a healthy risk culture that will reduce the impact of risk and drive business growth.

9.       Monitor for significant shifts in risk metrics: A successful risk management strategy focuses on monitoring shifts in risk levels. Although there may be differences in opinion on the optimal methodology for specific valuation metrics, any quantum changes in risk metrics can give a key signal to management in the way the risk is handled.

10.   Make it meaningful: When it comes to risk management, merely paying lip service won’t help. Rather, it is important that your risk management strategy is treated seriously as a tool to alleviate risk and improve your business. Assess the risk appetite of your senior management team and remain in constant touch with them to ensure they go as planned and act on the findings.

Risk Management Tools

1.       RM Studio: It is an all-in-one solution to strategize and simplify your risk management. The easy-to-use ISO/IEC 27001:2013 certified solution simplifies, organizes, and coordinates the complex and time-consuming process of spreadsheet risk management.

2.       Risk Management Software PRO edition: The fully features risk management solution is aligned with ISO31000. The prime focus of this application is qualitative risk and control assessments. It comes complete with Risk Heat Maps that can be created from different perspectives. Users can copy and paste hundreds of charts available with the application.

3.       Syntex: The highly scalable and intuitive enterprise risk management solution is designed to reduce the intensity of different types of risk, including environmental, quality, operational, health, safety, and security.

4.       Xactium: Constantly manage risk throughout the organization with Xactium risk management solution, which features a user-friendly interface and easy configuration. The software gives a complete real-time view of the risks faced by your business.

5.       Intelex: The user-friendly tool is designed in compliance with ISO 31000 risk management standard to help you identify, assess analyze, monitor, and review existing and potential risks. The intuitive application helps your business manage, mitigate, and prevent risk.

6.       Integrum: Integrum is the most comprehensive and highly configurable risk and compliance system. The web-based, fully scalable solution is designed for businesses of all sizes to streamline processes and identify and manage risk.

7.       RiskNav: A well-designed tool to facilitate the risk mitigation process. The easy-to-configure application lets you collect, assess, analyze, observe, monitor, and prioritize risk.

8.       A1 Tracker: An intuitive application for businesses looking to manage risks at different levels in their organization.  The tool facilitates the process of standard and custom classification of risk and fast deployment of risk management tracking.

9.       SAP: The easy-to-use risk management software helps users identify risk hazards, track key risk indicators, and understand systemic risk drivers and their impact on business.

10.   Metric Stream: identify, analyze, and mitigate potential risks with this user-friendly risk management app. The application integrates risk data in a single framework that enables comprehensive visibility and streamlines risk management lifecycle.

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