Top Risk Mitigation Strategies This New Year
Risk is a fact of business life. And the sheer number of threats any one business confronts also make it difficult – if not impossible – to eliminate all risks entirely. Indeed, safety leaders oftentimes need to choose. What are the risk mitigation strategies that should guide their efforts this new year?
Effective risk mitigation strategies are anchored in solid principles
From the best practices that exist, we conclude that the (eventual) design and implementation of risk management plans and frameworks must be contingent on an organisation’s specific factors. Those factors include the company’s objectives, context, structure, operations, processes, functions, projects, products, services, and assets.
What’s more, effective risk management adheres to certain principles. The principles advanced in best-practice risk management standard ISO 31000 include:
- Risk management creates and protects value.
- Risk management is an integral part of all organisational processes.
- Risk management is part of decision making.
- Risk management explicitly addresses uncertainty.
- Risk management is systematic, structured, and timely.
- Risk management is based on the best available information.
- Risk management is tailored.
- Risk management takes human and cultural factors into account.
- Risk management is transparent and inclusive.
- Risk management is dynamic, iterative, and responsive to change.
- Risk management facilitates continual improvement of the organisation.
Integrate risk management strategies into general management practices
Principles are one thing, though; execution is quite another. Risk management practices must also be folded into existing management practices, such as health and safety.
To that end, senior management should prioritise integrating risk management into all aspects of executive decision making. That, of course, requires senior management to do the following:
- Define and endorse risk management policy
- Ensure that the organisation’s culture and risk management policy are aligned
- Determine risk management performance indicators that align with performance indicators of the organisation
- Align risk management objectives with the objectives and strategies of the organisation
- Ensure legal and regulatory compliance
- Assign accountabilities and responsibilities at appropriate levels within the organisation
- Ensure that the necessary resources are allocated to risk management
- Communicate the benefits or risk management to all stakeholders
- Ensure that the framework for managing risk continues to remain appropriate
That’s not all. The successful design and implementation of the risk management framework depends on several additional factors. An important factor is the organisation’s context.
That context isn’t just internal, i.e., relating to organisational governance, structure, roles, accountabilities, etc. It is also external, which means social, cultural, political, legal, and economic factors should be accounted for, as well.
Further risk framework design points include:
- Accountability. Risk owners should be identified and given the requisite authority to manage risks. That authority comes with accountability for the development, implementation, and maintenance of the framework for managing risk.
- Integration. The risk management process can’t be distinct from all other organisational practices and processes. Instead, the risk management process should be embedded effectively and efficiently.
- Resources. Appropriate resources should be delegated to risk management, including people with relevant skills, experience, and competence.
- Communication and reporting. Well-functioning risk management processes depend on effective communication and reporting. Internal and external communication should be covered; specifically, plans should be made and implemented for communicating with external stakeholders.
Pulling everything together is where many companies flounder, especially when it comes to reporting. But they don’t have to. Risk management platforms, such as Noggin, can help organisations treat the entire risk management lifecycle to ensure better prevention.
Don’t take our work for it, though. Check out Noggin for yourself.