When we look at successful businesses, it can be difficult to gauge every positive contribution to their accomplishments. One certain factor, though, is the combination of unforeseen risk and the quality of risk management implemented. Poor risk management and exhaustive risk management both directly affect corporate performance, each in predictable ways.
It’s important to note that while the occurrence of risks can be uncertain, the impact of the resulting outcomes is not. These outcomes are rather predictable and you can calculate exactly how these will impact your business. As such, good risk management can effectively mitigate the negative outcomes that result from uncertainties and generate positive business outcomes. The following sections delve deeper into specific benefits that come from proper risk management.
Relate Business Objectives to Risk Management Activities
This is a flexible process. Business objectives should not be set in concrete without first evaluating the risks, and a risk assessment should not be completed without first considering business objectives. Many businesses will attempt to segregate risks into risk registers or lists but many risks are often interconnected and have different results depending on the combination, making lists ineffective. For example, the risk of internal fraud can be listed as both operational risk and compliance risk.
When relating objectives to risk management you’ll start at the top and let that fall throughout the rest of the organization. The result will be a network of risks that are sensibly tied to relevant objectives, which allows each member of the business to do their part to help make sure these objectives succeed. By considering existing risk before setting objectives, these business objectives become more realistic. In short, relating business objectives to risk management activities helps increase company awareness of these goals and increases the likelihood of them being achieved.
Facilitate Company Budgeting
A proper risk management plan involves cost planning, anticipating future costs, and prioritizing budget. Your risk assessment process will reveal the most at-risk areas of your organization and therefore clearly dictate where you need to divert resources, and how many. Budgeting includes not only financials but also time, equipment, and other resources.
This relationship reduces unforeseen costs, diminishes overhead, and keeps your organization under budget.
Proper risk management not only forces different personel and departments to communicate, but that communication is focused on improving the organization and meeting goals. This is the best type of communication you can hope for. Discussion here is based on factual and current information and establishes a channel of trust. The result is a better communicating and more efficient organization.
Satisfied Customers and Improved Brand Image
When an organization leverages risk management, risks are reduced or eliminated. The outcome is ultimately a positive experience for your customers and a positive force on your brand image. For example, mitigating risk of a shipment delay or quality concern results in a great experience for the customer who receives their order on time and as expected. Satisfied customers are truly one of the most positive business outcomes as they will promote your product or service and perpetuate company revenue with repeated orders.
Similarly, with your brand image, you will become known as a company that places importance on its customers. While preventing incidents and PR situations, your business will become more warmly regarded in the eyes of the public, which ultimately is going to increase your bottom line.
More Quality Data
Risk management requires data to be high quality, otherwise resources will be wasted and management tasks will not be as effective as they could be. This data includes the likelihood of risks, the impact of risk, the value of assets, departmental tasks and levels of compliance, and many other data elements that are spread across databases and systems within an organization.
Since data quality deteriorates over time, regular risk management provides up-to-date charts and graphs for decision makers. This ensures all moves are strategic and informed.
Start Creating Positive Business Changes
Now that we’ve reviewed some of the key benefits, it’s time to start seeing a more complete list of positive business outcomes that your organization will experience. Start with free access to the RiskWatch platform and begin your assessments today.
Some of the positives you’ll notice include the complete ease of communication. Instead of scattered and laborious communication, keep everything within the platform. The software even automates messages, introducing members of staff to their role and instructing them on their designated tasks.
Statistics are updated in real-time as new data is entered in the platform, ensuring you constantly have up-to-date figures representing risk, compliance, task progress, etc. across your organization, clients, or third parties. Automatic reports are generated with this data, making you capable of presenting to management at any time.