Running a successful business does not come easily. Business survival and continuity require good planning and management for the unexpected. Your business is at risk to the constant pressures of the marketplace and a range of hazards outside your control.
Making decisions that will minimize the adverse effects of accidental business losses on an organization involves five steps: identifying and analyzing exposures to loss, examining feasible alternative risk management techniques to handle exposures, selecting the most appropriate risk management techniques to handle exposures, implementing the chosen techniques, and monitoring the results.
Risk Management now includes new categories of liability, new approaches to mitigate risk, the managed care imperative, regulatory changes and many other developments have an impact on any business.
In an environment where change is a constant, it is important to have professionals who will invest the time and effort it takes to understand each client's business and how best to manage total cost of risk.
Implementing these decisions require performing the following four functions of the management process:
Risk management is a process, not a project that can be "finished" and then forgotten about. The organization, its environment, and its risks are constantly changing, so the process should be consistently revisited.
Determine whether the initiatives are effective and whether changes or updates are required. Sometimes, the team may have to start over with a new process if the implemented strategy is not effective.
If an organization gradually formalizes its risk management process and develops a risk culture, it will become more resilient and adaptable in the face of change. This will also mean making more informed decisions based on a complete picture of the organization's operating environment and creating a stronger bottom line over the long-term.
What is the likelihood of a risk occurring and if it did, what would be the impact?
Many organizations use a risk matrix to measure their risks on this scale. A risk matrix is a visual tool that details which risks are frequent and which are severe (and thus require the most resources). This will help you identify which are very unlikely or would have low impact, and which are very likely and would have a significant impact.
Knowing the frequency and severity of your risks will show you where to spend your time and money, and allow your team to prioritize their resources.
You've built your risk map and are now using it to help manage and mitigate your risk.
It is important to remember that your risk landscape is constantly changing.
Revisit and modify!
Revisit your rankings with the risk management team at least quarterly, to discuss if the status of any existing risks has changed or if any new risks should be placed on the map. Doing so will ensure that your risk map is a consistently helpful tool that will help you reduce incidents and costs.
What are the potential ways to treat the risk and of these, which strikes the best balance between being affordable and effective
Organizations usually have the options to accept, avoid, control, or transfer a risk.
Accepting the risk means deciding that some risks are inherent in doing business and that the benefits of an activity outweigh the potential risks.
Risk control involves prevention (reducing the likelihood that the risk will occur) or mitigation, which is reducing the impact it will have if it does occur.
Risk transfer involves giving responsibility for any negative outcomes to another party, as is the case when an organization purchases insurance.
Create repositories of mitigation activities, controls, and procedures to cover the areas that need it most.
Service Level Agreement
Service level agreement is a contract between us and you - the client, details the nature, quality, and scope of the service to be provided.