Two companies have in place risk management plans of similar quality and detail. One has worked tirelessly, dedicating an intense amount of time and money, to create a plan that meets the needs of the organization and that addresses the risk-related issues the company has been faced with in the past. They have hired consultants and other outside resources to help re-work the plan time and time again and have been waiting a long time for a plan that is customized to suit the needs of the business.
The other company came to have the same quality plan with the same level of customization with less money invested and less time spent. They cut months from their development time and were able to jump into the implementation of the plan almost immediately.
How did they do it?
Our second company knew very early on what risks were facing their business. Rather than investing months on trial and error, they dedicated resources to starting strong; identifying the right risks upfront so that the time spent prioritizing and manage those risks ends up being time spent investing in the organization’s future. While the risk identification process had been challenging at times, the strength of their risk management plan gained because of good risk identification was well worth the effort.
How do you properly identify the risks that threaten your organization’s success?
- Consult your insurance broker. One of the roles of your broker is to help your business assess its risks and to recommend coverage to protect against them.
- Examine past losses. Your broker can get your loss history from your present and past insurance companies, and you can look at your company history.
- Industry associations are an excellent source of information on potential risks for particular business types.
- Employee feedback should never be underestimated and should be sought regularly.
- Customer complaints and suggestions can uncover potential risks.
- Follow your industry’s trade press and pay particular attention to losses and legal precedents experienced by others in the same business. If it can happen to them, it can happen to you.
- Hire a consultant. There are many risks management consultants out there that can do a risk assessment for you. Again, ask your broker. They may provide this service, or may be able to recommend someone who can.
Risk management should always be an ongoing process with continuous monitoring and evaluation. Investing time upfront on identification does not mean that the process is finished after the plan has been approved for implementation. Knowing the risks for your organization early on in the process instead means that when the time comes to re-evaluate your efforts and the plan as a whole, you can now invest in further improving your plan and your risk mitigation.
How are you identifying risks that threaten your organization?