What’s the worst that could happen? Risk management is one of the first things you should be thinking about when planning for pretty much anything in your business.
The truth is, risk inescapable; success of your business is not determined by your ability to avoid risk, rather by your ability to accept, plan for, and take advantage of the varying outcomes risk might present to you.
It might sound negative, but risk management is actually more optimistic than it seems.
The key takeaway is that successful risk management strategies are proactive, as opposed to reactive.
By thinking ahead, you can prepare for and prevent risks before they even have a chance to arise.
In this article, we’ll take a look at how you can use Process Street to streamline and automate your risk management approach, including:
- Getting started with the basics of risk management
- Common risk management misconceptions
- Risk management standards
- merliniThe risk management process
- Key principles of risk management
- Benefits of risk management
- How to automate risk management
- 30+ risk management templates (free!)
- More useful risk management resources
Hopefully by the end of it, you’ll have a better understanding of how to focus your risk management efforts into a forward-facing, proactive approach.
There are lots of ways to approach and prepare for risk, and this article will give you the tools you need to master risk management.
Proactive (or simply “active”) risk management is defined by the preemptive nature of the process.
It doesn’t just seek to mitigate known risks; it is a future-facing process that seeks to enforce a kind of quality management framework in order to mitigate risks both known and unknown, and ensure that there is as great an effort as possible toward the prevention of risks of all nature.
Reactive risk management is at the mercy of the unknown; businesses that aren’t proactive will be lost in the constant battle against risks they haven’t adequately prepared for.
Proactive risk management is essential to any successful risk management program.
Despite the prevalence of risk management in business process management approaches, there is a tendency to see risk management as a focus on the negative outcome or potential of a business.
In reality, that’s not the case – risk management is a practice that depends equally on the ability to recognize and make the most of the positive, opportunistic side of risk.
There are a number of risk management standards designed to consolidate best practice principles and help to streamline and improve risk management implementations for businesses.
Another factor driving the standardization of risk management frameworks has been the increased scrutiny that organizations must face with regard to their risk management systems.
Risk management systems are often required to stand up to rigorous internal audits and assessments, in order to prove that they are effective in their implementation, and that they are in line with company goals and objectives.
The family of risk management standards defined by ISO 31000 is one such example of a leading international standardization of a risk management approach.
Risk management can be simplified into a process with clear steps, namely:
- Risk management objectives
- Risk identification
- Risk assessment
- Risk response
- Risk monitoring
Risks are essentially anything that might stop your business from achieving goals. That includes larger, severely high-risk concerns, but also smaller, seemingly insignificant risks on the level of process or individual projects.
In any case, all risks should be identified and recorded clearly and thoroughly.
Process Street uses rich form fields to record detailed information and media during a process. You won’t have to worry about misplacing or lacking for information when you build and run a process with Process Street.
But more on that later, when I show you the risk management process built specially for you in Process Street (and it’s completely free).
Also known as risk treatment, this stage is focused on responding to the highest priority risks.
The main approaches to risk response are:
- Acceptance (or retaining)
- Mitigation (or reduction)
- Transference (or sharing)
Each of these are covered in more detail in the section on risk management principles later on in the article.
It’s management’s job to decide which risks are highest priority, and to figure out an appropriate risk response strategy.
In keeping with the general risk management approach, risk response strategies should be considered in terms of the given risk’s impact on business goals and objectives, as well as the overall costs weighed against benefits for each proposed strategy.
These principles each represent a different type of risk response. After risk has been identified, the following strategies for risk treatment can be considered:
When a risk factor or event cannot be excluded completely, a company may try to reduce the effect of that risk by tweaking and adjusting certain aspects of operations.
The difference between risk reduction and risk avoidance is that risk reduction accepts that the risk cannot be completely avoided.
Retaining risk is the decision that a risk is actually worth the perceived damage or effect, from a business standpoint.
This means the organization will have to make adequate plans to deal with the eventuality of damage incurred by the risk.
A simple way of understanding risk retention from a business standpoint is to imagine a situation where a company’s expected profit is larger than the sum of the perceived risk potential. In this case, it’s logical to see why a business might choose to accept and retain a degree of risk.
No matter what industry you’re in, or what kind of product or service you’re selling, you can always quantify your productivity to some degree. Productivity is always tied to your process. What risk management allows you to do is look at your process and figure out ways to improve the way you get work done.
Not only will his help you optimize for higher productivity, it also means your work environment will be safer because you’ve lowered the amount of risk involved.
The positive impact of a risk management system is amplified when combined with automation.
When you consider that any risk management framework is essentially a series of repetitive tasks (because risk management by definition is a repetitive process) the benefit of automation becomes immediately clear.
By utilizing automation, you can save time and money by eliminating tedious manual tasks from your workflow.
What’s more, you actually reduce the risk of the risk management process, because less manual work means less room for human error.
You can easily automate your risk management process with Process Street.
In fact, the risk management template below already has a whole bunch of automation built in, like conditional logic for reactive decision making, dynamic due dates to keep on top of deadlines and streamline deliverables, and role assignments to cut out time wasted from chasing up colleagues to do their part in the process.
For a comprehensive introduction on how to use Process Street for risk management, check out this webinar video:
Otherwise, check out the gargantuan list of risk management templates we’ve prepared for you down below.
This risk management template is a simple process you can use to get started with risk management.
Of course, the best kind of risk management strategy will be highly customized, which is why you should edit this template to suit your own needs.
Nonetheless, this template will help you get a head start!
A failure mode and effects analysis is a method for identifying potential problems and prioritizing them so that you can begin to tackle or mitigate them.
This FMEA template is designed to help you follow a grid process for documenting your FMEA quickly and easily!
This ISO 14001 EMS structure template is designed to help you easily build standard operating procedures in line with the ISO 14001:2015 requirements for an environmental management system.
This ISO 14001 internal audit template is designed to be used to perform an internal audit against the requirements of ISO 14001:2015 for an environmental management system (EMS).
Self-auditing is an important part of risk identification and analysis, and can help to define a high-level overview of an organization’s performance, and how any perceived risks might affect that.
ISO 9001 is all about quality management systems. This audit template will help you assess the performance of your QMS against the requirements of ISO 9001:2015.
Quality is closely related to your organization’s ability to deliver value. Remember that risk management is all about preserving and creating value.
So, running a QMS audit will help you to pinpoint risks and problem areas, and ultimately improve your organization’s ability to deliver value to your stakeholders.
This ISO 9000 marketing procedures template is the filled-in version of the above ISO 9000 structure template; it’s an example of what a fully functional ISO 9001 mini-manual might look like.
Electrical inspection can be risky business – and an electrical inspection checklist will help you minimize human error and streamline the whole process.
This checklist is geared toward inspectors who are looking to visit residential properties to perform an assessment.
Our goal with this checklist is to create an actionable way to follow the correct procedures of industry standard inspections which can fit easily and fluently within the modern workflow, making the process easier and more effective than before.
This hotel sustainability audit provides a structured, quick and straightforward way for any hotel business to internally assess the sustainability of their operations.
For more hotel and hospitality templates, check out our hotel management template pack.
If you found this article useful, you might be interested in these resources:
- Basics of Enterprise Risk Management (ERM): How to Get Started
- What Is ISO 31000? Getting Started with Risk Management
- What is Quality Management? The Definitive QMS Guide (Free ISO 9001 Template)
- The Complete Guide to Business Process Management
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How do you approach risk management? Do you use any specific frameworks, tools, or approaches? Let us know in the comments below!