Why is Managing Risk So Important?
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“By failing to prepare, you are preparing to fail.” This quote by Benjamin Franklin sums it up best when considering how businesses should be regarding risk. When considering all the potential situations that can negatively impact a company, it is more important now than ever to have a Risk Management Plan in place. By identifying potential risks and managing them, an organization can make effective plans to ensure business continuity.
What is Risk Management?
Risk management can be defined as the identification, evaluation, and prioritization of risks. Once accomplished, actions can then be taken to minimize, monitor, and control the possibility of any unfortunate resulting events.
Security, Health & Safety Risks
Risks can originate from a wide variety of different sources but for the purpose of this blog I want to focus specifically within the context of Security, Health and Safety. These types of risks may derive from such sources as accidents, natural causes and disasters, deliberate attacks from adversaries, and even uncertainty.
Examples of risks may include, but are not limited to:
Fire
Tornados
Earthquakes
Severe Weather
Workplace Injuries and Illnesses
Property Damage
Infectious Diseases/Pandemics
Workplace Violence and Active Shooters
Bomb Threats
Economic Downturn
The above list can vary depending on various factors that may be involved with the affected company.
Key Elements of an Effective Risk Management Plan
The goal of a Risk Management Plan is to propose applicable and effective controls for managing risks. This plan should be established to emphasize a prioritization process whereby risks with the potential for greatest loss and probability of occurring are addressed first then so forth in descending order.
A successful Risk Management Plan will:
Identify all potential risks;
Assess vulnerability;
Determine consequences if left unchecked;
Identify reduction measures; and
Prioritize the risks accordingly.
A Risk Management Plan documents the decisions made about each of the identified risks and how they need to be handled.
A Risk Management Plan should apply the following principles:
Create value
Be an integral part of the organization
Be included in all decision making
Address uncertainty
Be systematic and structured
Based on best information
Be flexible
Consider human factors
Be transparent and inclusive
Be dynamic, iterative, and responsive to change
Capable of improvement
Be a living document that is continually reviewed and assessed
Benefits of a Risk Management Plan
The use of the following control strategies for risk can be utilized in effective decision making and planning:
Avoidance – elimination of threat by not performing an activity that presents risk
Reduction – optimizing or mitigating the risk by reducing the severity of the impact
Sharing – transferring or outsourcing risk by sharing with another party to reduce the burden
Retention – accepting and budgeting according to the risk that is expected
By implementing a Risk Management Plan, it will assist with maintaining a secure and overall safer organization, as well as provide better peace of mind regarding the unexpected.
KERAMIDA is a full-service Security, Environmental, Health and Safety consulting firm that can assist your business in being more proactive by evaluating your organization to create a written, comprehensive Risk Management Plan. An onsite audit and review of documentation can be performed to ensure all potential risks are identified, evaluated and countered with appropriate methods of control. For immediate assistance, contact us today or call (800) 508-8034 to speak with one of our risk management professionals.
Blog Author
Andrew Tirmenstein
Senior Project Manager, Security, Health and Safety Services
KERAMIDA Inc.
Contact Andrew at atirmenstein@keramida.com.
