Businesses of every kind face risks. But for many, risks are thought of as the catastrophic-type events that – as completely devastating as they would be – don’t necessarily represent the most pressing threats to the day-to-day business. The face of risk is changing. It’s not just about the traditional, obvious risk events like earthquakes, tornadoes, or active shooters. Increasingly risks are those things that can slowly eat away at your business and profitability. These threats can come from inside or outside the organization and have the potential, not only to harm people and property, but also to disrupt normal business operations.
Businesses of all kinds have a responsibility to incorporate risk management and mitigation into the core of their business, as a regular, daily activity. Here are some tips for doing so:
Redefine risk – In today’s world, risk is not just the major, catastrophic events, but includes activities, people and events that can disrupt the business in more subtle and slower, but just as damaging ways. Issues like employee sabotage, terrorist threats, malfunctioning equipment, failed operational processes, inadequate training, and safety hazards can all present risk to the business. Smart businesses consider risks those things that have the potential to damage people or property, disrupt the business, render legal consequences, or even decrease efficiency. They can be people-driven, technology-driven, or process-driven.
Understanding that risk management is essential to business – Previously seen as the sole responsibility of security, attorneys or executive row, today risk mitigation is everyone’s business. Risks can come in the form of poorly trained employees, inadvertently causing loss each time they come to work, or a process that fails to identify safety hazards before they trigger losses. For this reason, everyone across the organization should make it their business to identify and address these threats to the business.
Leverage technology to mitigate risk – Video surveillance, access control, mobile phones, the Internet and other tools facilitate the flow of information and provide managers and employees with the data they need to understand what is going on across their organization. These tools provide visibility – like never before, managers at one location can truly gain a good understanding of what is happening at another location. Well-implemented and used, technology is invaluable to risk mitigation efforts.
Assess your risk performance with quantitative scale - Organizations that are most effective at reducing their risks are those that measure and track it over time. By assessing risk on a quantitative scale, it’s easier for organizations to track progress on an ongoing basis. The Risk Performance Index is a method for quantifying your overall level of risk, by plotting different threats on a chart with two axes: likelihood of occurrence and the potential severity of occurrence should the problem occur. Not only does this tool allow you to identify which risks are most critical, but it also allows you to track progress over time. Download a sample Risk Performance Index for a school environment.
Use audits to monitor – Audits are a great way for organizations to both identify risks and ensure that mitigation efforts are being implemented consistently across all locations. Audits test where processes and people fail, helping organizations pinpoint exactly where attention should be directed.
We are pleased to feature this guest blog by Eric White from Wren Solutions. Eric has over 20 years of experience in our industry and currently serves director of retail strategy for Wren. White maintains his regular blog at http://www.wrensolutions.com/LPXtra_blog/ and can be reached via email at email@example.com.