Over the last few weeks, we’ve been sharing why risk management planning is essential for your business. We know risks are part and parcel of running any business. Big risks. Small risks. And everything in between. Risks are everywhere. So having an effective risk management plan in place could be the difference between the success or failure of your business if the worst happens.
Our blog post Risk management – What’s your plan? outlined why risk management planning is so important and that it typically involves the following steps:
- Step 1. Identifying and assessing potential risks
- Step 2. Working out how to manage and control those risks
- Step 3. Keeping an eye on how potential risks change and evolve over time
We delved into Step 1 in our post Risk management – What’s the risk?, explaining how you can identify and assess the risks that have the potential to impact your business. And last week, we looked at Step 2 and how you can manage and control risks in our post Risk management – It’s time to take control!
This week, rounding out our risk management series of posts, we’re taking a closer look at Step 3 and revealing why you need to continually monitor risks and ensure your risk management plan is up to date.
A risk management plan is definitely not something that is ‘set and forget’. Yes, you’ve identified and assessed all your risks. Yes, you’ve worked out how best to control those risks. But your work is far from complete. Risk management is a continuous process. Here’s why…
I know my risks. I have my plan. Am I done yet?
No. You’re not done. Not by a long shot. Risk management planning is not a case of creating a comprehensive document, putting it on the shelf and then saying “my work here is done”.
An effective risk management plan needs to be continuously monitored. Why? Because risks change over time, as does the environment in which your business operates. So you need to regularly review your plan to make sure it meets your needs.
Is the chance of a risk coming to fruition the same, more or less than it was before? Have there been any changes in your operating environment? Is your business facing new risks? Are some risks no longer relevant? Are there any triggers that indicate that a risk is more likely to occur than it was in the past?
Risk management is an ongoing process. Regularly reviewing your risk management plan and monitoring risks is the glue that binds the whole risk management process together and ensures your plan continues to add value to your business.
How do I monitor and review my plan?
Here are a few ways you can test your plan:
- Drills and training – Providing training to your team and conducting drills, particularly if your business deals with hazardous materials, special equipment or you have employees working in risky environments, can be a good way to uncover any gaps in your risk management plan and work out if you’re able to respond appropriately to risks.
- Planning meetings – Bringing your team together and talking to them about your risk management plan and their individual responsibilities can be a good way to stay on top of risks. Review the plan as a group and encourage everyone to identify problems and solutions.
- Scenario testing and role playing – Simulating a live event and allowing your team to make decisions as a scenario unfolds is a great way to test your risk management plan. When planning scenarios, think about the risks you’ve identified in your Risk management review – this will help ensure the scenarios are realistic and give you a better idea of how effective your plan is likely to be.
Help is on hand
If the process of risk management planning seems daunting, don’t despair. There are experts on hand to guide you through the process.
Make sure you seek advice from a specialist who has lots of experience when it comes to the risks that may impact a business just like yours. They’ll be able to help you identify and assess the risks relevant to your business, work out how best to control and manage those risks, and then put a plan in place to regularly monitor and review your plan.
Remember, having a risk management plan in place could make or break your business. So don’t put it into the ‘too hard’ basket. Talk to an expert today and get the ball rolling.
Emjay Insurance Brokers can provide a risk management review, advice and solutions to businesses of all sizes. They make it easy for you to access the advice and services you need to ensure your business is protected. Contact us today to discuss your needs on (02) 9796 0400.