Morrison insurance Solutions

The importance of Risk Management

Every business is prone to risk and even the adverse are at the point where it is riskier not to do anything when it comes to a risk management plan. The key functions of risk management are identification, analysis, and the control of possible future events - It is a proactive measure to help towards the elimination of any risks.

So why is risk management important?

The expenditure of fixing damage and/or the loss of valued possessions or even customers to competition after a catastrophe can have a significant impact on the bottom line. By identifying and managing risks you are able to actively protect yourself from any potential catastrophes and save you valuable time and money. A risk management system is there to do more than identify risk, a good system should also quantify the risk, predict the impact, and put procedures in place to mitigate the risk, or even eliminate it completely.

What are the different types of risk? 

There are many different types of risk that threaten businesses and it is important to identify which they are. The possible risks include health and safety, cyber, financial or even legal risks. Any business could suffer from any of these so it is important to have a strategy in place to help mitigate them.

How can you mitigate risk?

There are many ways that you can manage risk effectively leading to a successful risk management plan, a few examples are:

Identifying potential risks early on by reviewing any possible risk source and listing all of them.

Prioritise the risks as some risks have a greater impact on the business. By knowing which risks are going to have a greater effect on the company you can then spend more time on reducing the impact and the probability of the occurrence.

Understand the reason and impact of the risk as knowing what the root cause of the risk could be it can then be determined how best to manage it. By understanding what the likely impact of the risk is you are then able to effectively optimize your response to the risk mitigating the time it takes to get things back to where they were before had.

Develop a response to the risks by asking what can be done to reduce the likelihood of each risk happening? And, what can be done to manage each risk, should it occur? This means that you are able to minimize the negative effects of the project.

Put in place a preventative measure for each risk that would help reduce or eliminate the risk likelihood.

Have a contingency plan ready in case a risk should occur, therefore, you should be able to put plans into action, reducing the need to manage the risk by crisis.

Maintain a risk log to view the histories of risks and to then be able to track if there are any patterns or reoccurring risks that need to be reviewed and have a prevention plan put in. 

What to do next?

Risk is a fact of life for every business, but not every business faces the same risks. That’s why it’s vital to get professional advice that considers the big picture. By having a risk management plan in place, a business can ensure that its viability is protected for the long term as prevention is always better than cure.

If you would like to find out more about the benefits of risk management, please do not hesitate to contact us.

01789 761 660

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