Are you thinking about risks within your organization the right way? How should each risk be allocated resources? And how do you determine a risk’s urgency?
Companies often struggle to strike a balance between managing risks and meeting stakeholders’ needs. This can feel like a tightrope walk for many companies, and of course, this balance varies from business to business drastically. Here are two mistakes many companies make when trying to balance their risk assessment and response.
Mistake 1. Failing to consider the big picture.
Many companies have a tendency to rush into making decisions and dealing with risks head-on as they arise. This is the wrong approach to risk management, and can often lead to wasted resources, and unresolved problems.
Identifying whether a risk within your organization is part of a large trend or not should be integral to your risk management process. By identifying the patterns and calculating the potential losses over time, companies can allocate the right number of resources and time proportionally to the risk itself. Examining not only the immediate risk but the context surrounding that risk is key to an effective response.
Companies often miss the forest for the trees when it comes to risk management and assessment- they never manage to get “above the treeline,” so to speak, and see the problem from an elevated perspective. The result is a course of action they would not have taken if they had the right perspective from the beginning.
Having the right information and the relevant data available to upper management is a key piece of the risk management puzzle. By adopting systems that track our business activities as they happen, we can now gain a top-down perspective on key business activities. As a result, companies that implement such systems are better equipped to make smart risk management decisions, since they better understand the context in which risks exist.
Mistake 2. relying only on a periodic review
Risk management, at its core, is about responding to changes within your organization. Many companies rely on a periodic review of risks to update them on the status of the risks that threaten them. Unfortunately, using this system often means responses to changes are delayed, and poorly planned.
If you think about a baseball player, making sure they time their responses to the ball is critical to the success of their swing. Their job is to sync up their swing to the arc of the ball, and this requires forethought and planning. If they take their eye off the ball even for a moment, they risk ruining the timing, and the swing will be rushed and poorly synchronized.
In order to effectively manage risk, a company’s response to changes must be timely and well planned. Using a system to track risks in real-time and in the context of your business operations allows you to do this much more effectively than a periodic review. When something changes in your organization, modern systems can notify you about how it affects risks, allowing your company to respond immediately, rather than when the next periodic review rolls around.
Failing to keep your eye on the ball can lead to disaster, and responding appropriately at the right time will ensure your company’s future success. Having the right systems in place for monitoring risks should be high on the priority list of any company today.
Periodic reviews should be a thing of the past. In times as turbulent as the ones we live in, making sure your responses are timely and effective could be what makes or breaks your company.
Here at Totum, our software is designed to give companies a comprehensive and accurate picture of their risks in the context of the business operations. We provide people with the relevant information they need to get a full picture and notify them in real-time of any changes to those tracked risks. Making the right decision is far easier when you have all the relevant information in a timely fashion.
If you’re curious about ways your company could better integrate its risk management, get in touch with us today. We built a system specifically designed to help businesses to centralize their information. This provides businesses with a full picture when it comes to risk management, and helps them make decisions in real-time. Request a demo using the contact form linked here.