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Editor's Note: Take a look at our featured best practice, Risk Management SOPs (+600 KPIs) (1587-slide PowerPoint presentation). Curated by McKinsey-trained Executives Complete Risk Management Standard Operating Procedures (SOP) Business Toolkit: Comprehensive Guide to Risk Management In today's dynamic business environment, risk management is a critical area that ensures organizations can identify, assess, respond [read more]
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Risk management is a key part of any responsible business. This is the process of identifying, assessing and reacting to potential problems that could harm your business. Below, we explore why you need to control risk.
Controlling risk is particularly useful because it can help you establish the greatest threats to your company. By considering your risks, you’re able to work out what issues are an urgent problem, and which issues you can afford to accept for the time being. An easy way to establish your priorities is to create a list based on how likely issues are to become problems – with the most likely forming the most urgent priority. On top of this, you can also calculate the potential financial damage from each risk and let that shape your priorities too.
Prepares the Business for the Worst
Controlling risk can also help ensure that you put in place a rigorous response structure should a risk actualise. This could refer to having the correct insurance in place to minimise the financial cost. Or it could refer to having a white collar defense and investigations team in place to help you with any legal concerns. This means that you can defend yourself from accusations of fraud or any other similar illegal activity. The benefit of risk control is that it can proactively prevent damage being cause to the business, while also helping you to put a plan in place should damage occur.
Saving Money
Despite the initial outlay of getting risk control in place, in the long-term, it’s likely that these controls will save your business plenty of money. For a start, they reduce the risk of accidents occurring at work – not only will this help your workforce, but it’ll also save you money from paying out compensation. On top of this, compliance issues cost businesses a significant amount of money as they lead to fines and lawsuits. But a risk control system can mitigate this damage. Risk assessment will also show your employees that you care about the business and the staff. This could possibly improve morale and productivity.
Putting in place an effective risk control system is crucial for a business. By saving you money and preparing the business for an emergency, you can give yourself true peace of mind.
You can download in-depth presentations on Risk Management and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
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