February 24, 2014 Leave a comment
Circulating the business world is the idea of companies incorporating risk management into their business models. No longer is the process of assessing risks just for the financial industry, but is now being applied to businesses in all industries. Find out what the risk management buzz is all about.
What is risk management?
Risk Management involves first identifying, evaluating, and managing the risks associated with your company or industry. Once made aware of these potential risks, a strategic plan is developed that is designed to reduce the risk’s negative impact and outcomes.
Why should I care about risk management?
Risk management is a helpful process because of its ability to be widely applied to any company in any industry. Regardless of what industry you are in, chances are there are risks associated with your particular work. If in the restaurant business, you have the risk of running out of food or cross contamination. If in the medical industry, there is always concern regarding malpractice lawsuits. In the end, you can never be too careful or prepared–preparation makes perfect.
So, where do I start?
After you identify the risks associated with your business, your plan to minimize this risk is the next step. Typically there are four strategies associated with risk management:
- Avoidance – Avoid and eliminate the risk altogether by withdrawing from any activity that may lead to this risk.
- Reduction – Rather than completely avoiding the risk, simply just reduce the amount of activity that consequently leads to the risk.
- Sharing – Instead of putting the risk management responsibility on your business, choosing to outsource the process to companies is always an option. Essentially, this is when Business Credentialing Services comes in to play.
- Retention – If there is no getting around the risk, sometimes the best option is to accept the risk and budget for it, knowing the risk is inevitable given the nature of your business.
Whatever strategy you chose for your risk management plan, be sure the plan is realistic and feasible when it comes to execution. Risk management is a waste unless it can actually be done and be beneficial. Consider the following guidelines when dabbling in the risk management process:
- Systematic – Incorporating risk management into your business processes just to do it will not help you. Approach risk management plans with a strategic and systematic goal (this is when the four risk management strategies mentioned above become useful).
- Specific – Outline all the specific details of your risk management plan. This will ensure the plan is in line with the original risk management goal. In addition, consider all the ramifications associated with your plan. Doing so will protect your business from unforeseen outcomes.
- Compatible – Risk management plans should be compatible with your existing business processes. If not, the chances of them working are minimal.
- Flexible – If your initial plan is not doing much for the business, do not hesitate to modify it. Successful businesses are those that are able to be flexible and can adapt to necessary changes.
The great part about the risk management process is that it can be completely personalized for your business. However it is done and implemented is up to you, but it’s apparent the advantages of analyzing potential risks are worth the effort. For help with your business or company’s risk management, contact Business Credentialing Services at 1-(862)-242-5500.