Every important jobs or business involve risks, and the extent of the risks might vary, but they clearly exist, whether you like it or not. It has probably become the way of the world that people who take more risks end up getting better results. Especially in business, people who take risks have made huge contributions to the economy of any nation from time to time. Thus, we cannot necessarily choose not to take any risk if we survive in this fast-paced world.
But, there are also events in history like the “Great Depression” of the United States that stand as a reminder of how hard someone can fall when risks were taken without any effective measures in place to manage them. Thus, it is better to give significant attention to the risk factors when running a business, and here are some ways you can effectively manage any risks that may or may not happen in your business.
Identification of the Risks
First of all, you need to make a list of variables involved in running your business. Because, as a modern modulation to a great proverb, wherever there are variables, there are always possibilities for risks. The variable may be an important raw material for your business, or it may just be a group of employees that work at your centre. So, make a complete list of every possible risk that you can think of.
Assessment of the Risks
The next step requires you to identify the different ways a particular risk can occur and how each of these risks can impact the productivity or performance of your business. For example, if your business faces a threat of an increase in the cost of raw material, your job might be to predict the impact of such risks and to take the necessary measures to ensure that it doesn’t affect your business in a significant way.
Classification of the Risks
After analyzing the risks, classify them into 3 categories – High, Moderate and Low. If you want to be thorough, you can also increase the classifications to cover the little grey areas between these categories. This will be of huge help when prioritizing which risks are to be dealt with first.
So far, we have seen how to identify, analyze and classify the risks. The following segments will look into the aspects involved in tackling every one of them.
Chain of Responsibility
One of the most important variables that can turn any business around is its workforce. From the very bottom to the highest of the hierarchy, everyone has a role in running the business. Like the human body, every business has different departments, and each has a role in maintaining the business’s life. A fault at one part has the capacity to affect the entire system. So, proper leadership within each sub-divisions of a business can be helpful at times. These leaders should be responsible for ensuring the proper completion of their teams’ roles and training and appointing recruits in times of necessity.
Strategic Risk Management Team
Delegate the responsibilities of formulating and implementing risk management strategies to a team of professionals, preferably each with a unique set of skills. This team should be able to study and observe every part of the business. This observation can provide a proper basis for identifying risks and the other steps that proceed further. Sometimes these studies can provide insights on some of the underlying issues that may potentially become a serious threat in the future.
The management of human resources can be tricky at times when compared to other resources. So, it is necessary to keep an adequate set of buffer staff at your disposal to manage when things seem to get out of hand. In addition, finding potential leaders within the workforce and training them to take up the role of a manager will be of huge help in the long run.
Identifying flaws in the scheduling system and scheming better ways to ensure efficient use of energy and workforce can save you a lot of time. As time is one of the most formidable variables, mastering it leaves you with one less risk at hand.
Honesty & Transparency
Every employee is a part of the business and can only build a successful business upon the strength of its workforce. So, being honest with them builds their trust towards the management of the business and addressing the problems with transparency can move them beyond your imagination.
Constant Monitoring & Reviewing
The role of supervision is to ensure the proper functioning of the business. When the employees are put under regular monitoring, they will develop a habit of working with oversight, and their work tends to get better with time. Constant reviewing can also help identify a potential problem or even an existing problem before it becomes too late for the management to handle.
Rewards and Recognitions
The reviewing will not only help in finding the flaws but also to recognize the hidden gems within the organization. They are to be identified, commended, recognized and rewarded for their efficiency. Also, the delegation of further responsibilities can create an environment of healthy competition within the business, motivating the other staff to do better. In this way, you can turn the variable of human resources to work in your defence.
Most of the risk management works lie in predictions and strategies. Thus, if a properly operating system is identified to manage risks, it is much easier to avert, face or overcome any threats to the business. Therefore, risk management plays a significant role in maintaining the success of any business, and when properly done, it can hold the business together for a very long time.