Importance of Risk Management for Your Business

The recent uncertain economic global climate of the past few years has had a significant impact on how organisations operate and conduct their business operations. Businesses that once operated smoothly with a little assistance from forecasts and projections now abstain from making business decisions set in stone. Today, companies have a renewed focus: to manage risk.

Risk management is essential to the success of any organisation.

What is Risk Management?

Risk management is the term applied to a logical and systematic method of the forecasting and evaluating the financial risks together with the identification of procedures to avoid or minimize their impact. Risk management is recognised as an indispensable component of sound governance, leadership, and management. It’s a concrete process consisting of steps, which, when executed correctly, can enable continual improvement across organisation decision making processes and procedure.

Regardless of size or of the industry, risk is the main cause of uncertainty for any organisation. Risk can come from both external and internal sources. External risks are those circumstances management is not in direct control of, such as exchange rates, political issues, and interest rates, etc. On the other hand, internal risks can be mitigated directly within an organisation, such as non-compliance, data breaches, internal theft, etc.

What Should a Risk Management Plan Include?

Risk management can be broken down into two essential components; avoiding or mitigating losses and identifying opportunities. Together with your risk manager, you will assess the potential internal and external threats potentially facing your organisation. Once these threats are recognised, you will develop a plan of action to respond to said threats (if/when necessary).

A successful risk management plan should recognize and address possible risks and threats.

The main elements of the risk management process include the following:

1. Risk identification – What can go wrong? These risks can apply to the particular work you do or to your workplace.
2. Risk analysis – How will these risks impact your business? Here you will consider the probability and impact to your operations (i.e., is it high or low?).
3. Risk control – What can your organisation do to prepare or respond? Here you will consider what you can do to prevent the loss from occurring and how to recover if the loss does occur.
4. Risk treatment – In the event that something does happen, how will your business pay for it?

Benefits of Petra Risk Management Solutions

At Petra, we leverage the power of our industry-leading P3 risk management processes to the benefit of your organisation. The Petra Plus Process (P3) provides individually tailored risk solutions to mitigate the risks facing your company.

• Lower insurance costs through proactive loss control and effective claims management.
• Provides custom tailored risk management solutions based on needs unique to your organisation.
• Provides context for understanding the performance of a project while contributing to peer reviews, health checks, or audit systems currently in place.
• A robust approach to mitigating risk enables teams to better communicate about project challenges in a more timely way.
• Rather than relying on the professional guesstimates, risk management means creates more accurate contingency budgets.
• Promote brand culture, as risk management shows employees and clients you have clearly defined a set of expectations for accountability for the future of your organisation.
• And much more.

If you are interested in learning more about how risk management can benefit your organisation, contact a member of our team to schedule your free consultation.