Risk management is essentially crisis prevention and can require years of experience to execute in an effective and efficient manner. By continually identifying potential vulnerabilities within an organization, you are able to mitigate the possibility of a crisis situation arising. Different organizations and industries will face different risks, and it is important to be aware of which are relevant to your organization.
Risks your company could face and risk management:
Operational risks can include a labor strike, contamination, or defects in products. Each of these spreads a negative image of your brand and hurts the trust you’ve built with customers over the years. Trust in a product is hard to rebuild, but mitigating these risks can help keep a small problem from turning into a major crisis situation.
These are the sort of risks that cannot be as easily predicted or prevented. They include extreme weather or political and legal changes. Managing perimeter risks often looks like contingency planning. In cases where these sorts of instances occur, the risk of a crisis lies in being unprepared. It is key to come up with plans for how you will adjust to a variety of changing scenarios. By preparing ahead of time, you will be able to react more quickly and deliberately if any of these risks should come to fruition.
Strategic risks could cause changes in your company’s leadership or loss of reputation either in your industry or the public eye. Certain strategic plans may make sense from the inside, but those who do not understand the risks could question your judgment and doubt your good business practices. You need to plan for a public response to dramatic changes to your strategic plan and prepare a message that explains your decision and its benefit to stakeholders and the public.
Almost all organizations have the potential for a financial crisis, but by constantly managing the potential risks that lead to a financial crisis, they can be avoidable. Evaluating the financial state of an organization or company can sometimes be enough to understand and potentially mitigate the risks involved.
By taking time to look into all financials, and identify possible areas of risk, you cut down the possibility of a financial crisis situation exponentially.
If you have any questions, contact Darren Richards with Tucker/Hall at 813.228.0652 or via email at email@example.com.