Risk managers know the purpose of their role and the value they bring to any organization. However, other employees may not understand what the risk department does or the widespread benefits of their strategy and actions. In many cases, they might be unable to accurately define risk management! This creates a problem. It’s harder for risk managers to get the buy-in to implement mitigation procedures when risk management isn’t common knowledge. To illustrate the importance of risk, here are 10 reasons all employees should care about risk management. We encourage you to share this with your team!
10 Reasons Risk Management Matters for All Employees
1. Everyone has to manage risk.
Every organization faces risks. As most business people know well, sometimes risk is inevitable in order to achieve success. In spite of this, risk management is sometimes seen as “the department of no” — those who deny any project plan that seems to have any potential risk. This is the opposite of the truth. The purpose of risk management is not to eliminate all risks. It is to minimize the potential negative consequence of risks. By working with risk managers, employees can make smart risk decisions to improve the chance of reward.
2. Risk management makes jobs safer.
Health and safety are critical parts of a risk manager’s role. They actively seek out problem areas in the organization and look to address them. They use data analysis to identify loss and injury trends and implement strategies to prevent them from reoccurring.. This clearly benefits employees in physical work environments, such as construction, but can also help office employees and those in similar positions through methods such as ergonomics. A safer workplace is better for everyone and is dramatically impacted by risk management.
3. Risk management enables project success.
No matter the department, risk managers can help employees succeed with their projects. Just as they assess risks and develop strategies to maximize organizational success, they can do the same for individual projects. Employees can reduce the likelihood and severity of potential project risks by identifying them early. If something does go wrong, there will already be an action plan in place to handle it. This helps employees prepare for the unexpected and maximize project outcomes.
4. Risk management reduces unexpected events.
Most people don’t like surprises, especially when it has an organizational impact A risk manager’s goal is to map out all potential risks and then work to prevent them or best manage them. It’s impossible to think of every possible risk scenario and address them all, but a risk manager makes unpleasant surprises less likely and severe. Risk manager or the risk management department should be the first place an employee turns to when it seems like something serious could go wrong.here’s a good chance a plan is already in place for it.
5. Risk management creates financial benefits.
The risk department should not be viewed as a cost centre for the organization. In fact, it directly creates value. With trend analysis, risk managers can spot high-frequency events and work to minimize repetitive losses. Incidents will be less likely to occur and have less of an impact when they do, potentially saving the organization thousands if not millions of dollars. Risk managers are also the experts who procure the appropriate levels of insurance to maximize the financial impact of the risk management program.
6. Risk management saves time and effort.
Employees at all levels spend time submitting data into the risk management department when incidents occur.These tasks are often completed in disjointed and inefficient ways. By streamlining these tasks, the risk department is able to alleviate the burden of tedious data submission from employees, allowing them to direct time and energy towards their true roles. With a solid process in place, it is easy for employees to buy-in to high ROI risk management initiatives and facilitate risk managers’ roles and reap the benefits of a formal risk management program.
7. Risk management improves communication.
Horizontal and vertical communication are essential for organizational and employee well-being. They promote understanding of internal and external issues and help everyone work together effectively. While many employees know this, it can be difficult to put into practice if some parties don’t understand the impact it can have. Risk managers can help. They aid horizontal communication by providing a centralized touchpoint for all risk data and providing reports and analysis. Risk managers promote vertical communication by setting expectations and relating data to organizational goals. Each additional method of communication benefits employees.
8. Risk management prevents reputational issues.
Many risks involve a reputation factor: something happens that causes the public to negatively view the organization. Reputational issues could impact individual employees as well, even if they weren’t actually involved. A formal risk department greatly decreases the likelihood of this fallout. When an incident inevitably occurs, a formal risk management program and processes will quickly contain the event and lower the chance of escalation and widespread negative consequences.
9. Risk management benefits culture.
A strong risk management culture is better for all parties: frontline employees, risk managers, executives, and decision-makers. It creates a mindset of prevention and safety that permeates the organization and influences the actions of employees. It sets expectations of performance and sends a positive image to the public.
10. Risk management guides decision-making.
Decision-making is a challenging process, especially when making significant choices that will have a large impact on future success. Risk management data and analytics can guide employees in making wise strategic decisions that will help meet and exceed company objectives. They can also advise on the strengths and weaknesses of a decision alternative and provide recommendations on what risks to pursue and which to avoid. The risk department is an excellent source of guidance for employees in all areas.
This information should provide a new appreciation for any employee that interacts with risk managers and help to improve buy-in to risk management initiatives across the organization. Use it to garner support for risk management objectives or achieve any of the benefits discussed here. Want to learn more about the significant benefits risk management can bring to your organization?
If you found this article helpful, you may be interested in: