Risk Management Planning
When you are in business, you are prone to several risks. These could come in the form of financial risks, legal liabilities, management errors, accidents, and natural disasters. Risk could also come in the form of IT security threats and data related risks.
While you may think that common sense could help businesses avoid risk, there are several risk management standards in place making this process more complicated than it seems. That’s why it’s important to follow a risk management plan which includes the following steps.
Risk Identification: The company identifies all possible risks that may occur.
Risk Analysis: The company determines how likely the risk is to occur, its possible consequences and how it can affect the company’s projects and objectives.
Risk Assessment and Evaluation: The risk is further evaluated in terms of how likely it is to occur and its consequences. The company then decides whether the risk is acceptable and if it is one the company is willing to take. This decision is based on what is known as the risk appetite, defined as the level of risk an organization is prepared to accept.
Risk Mitigation: In this step, the companies assess their highest-ranking risks to develop plans to alleviate them using specific risk controls. Risk mitigation processes, risk prevention tactics and contingency plans are designed to handle worse case scenarios.
Risk Monitoring: In this final and ongoing step, the company continues to follow up, assessing and monitoring new and existing risks as the management process is reviewed and updated on a regular basis and as needed.
Risk management planning is necessary for businesses, helping to keep them protected from possible dangers. Following the recommended procedure will ensure your business is as safe as it can possibly be.