If you do not have a plan in place to reduce risk in your organization, then you are walking a tightrope of uncertainty. Let me share with you why risk management has become more important in today’s business environment and offer ways that each of us can reduce it going forward.NEVER MISS ANOTHER UPDATE.
Avoiding Risk is Big Business
The threat of litigation, terrorism, identity theft, the economy and natural disasters all pose a risk to businesses and organizations. Ninety percent of executives surveyed by Quality Digest were building or looking to build enterprise risk management (ERM) into their organization. An ERM program identifies the risks, defines the processes and investment required, and how the efforts will be coordinated.
How To Reduce Risk
So how can we take some of the bite out of the risks I have mentioned? Well, there are four ways that you can immediately rescue the vulnerability and position your organization to succeed.
The four ways of managing risk are 1) reduce risk, 2) avoid risk, 3) self-insure, and 4) buy insurance. Lets unpack them further for clarity.
- Reduce Risk: An organization can reduce risk by establishing loss-prevention programs, including education, safety inspections, emergency drills and equipment maintenance. Depending on the type of firm, video cameras, sprinklers, smoke detectors, and safety devices can be utilized.
- Avoid Risk: Every risk cannot be avoided, but some firms are avoiding risk in the following ways: not accepting hazardous jobs, losing outside board members who do not have liability protection against legal action for firms they represent, or reducing investments to avoid financial loss.
- Self-insure: Self-insurance is setting aside money to cover routine claims.
- Buy Insurance: This is the primary source of protection from loss. Spending by businesses, non-profits and individuals on insurance premiums accounts for ten percent of gross domestic product.
Risk and Moving Forward
While not exhaustive, if initiated, these mitigating steps create an opportunity to protect the legacy of your organization and position you for long-term impact. In short…be intentional and remain aware of the risks associated with your enterprise while taking the necessary steps to mitigate that risk.
Point of Clarity Quote:
Success usually comes to those who are too busy to be looking for it.
— Henry David Thoreau