What is risk management?
Organisations usually exist to accomplish certain objectives. Any barriers or obstacles to achieving these goals are risks. Risk management is the process of identifying and managing things that could prevent your organisation from achieving its objectives.
What types of risk might you face?
Risk can broadly be categorised as either strategic (or business risks) or operational risk.
- Strategic risk includes areas such as personnel, financial, technological, managerial, political, environmental, competitor social, contractual or legal.
- Operational risk is more often associated with physical loss or damage such as fire or personal injury.
What are the benefits of managing risk?
Risk management is a now a well-established requirement of good corporate governance and therefore often features heavily in audit inspections and assessments. Having good risk management procedures and systems in place means you can identify and then prioritise your risks, taking practical steps to manage them.
Risk management is central to the protection of people from death and injury and the protection of an organisation’s assets. The cost of losses is usually only a fraction of the cost to businesses; there may also be uninsured losses such as management time, administrative costs, damage to reputation and hospital expenses.
Loss prevention and business improvement are very closely aligned as the prevention of risks is better than having to manage losses.