Risk Management Plans – BONUS

What It Is

An organization’s risk management plan outlines the potential risks it faces, as well as methods for minimizing or eliminating those risks.[1] The risks and corresponding remedies vary depending on the organization, with examples including financial risks and safety risks.

Why It Matters

A risk management plan can help your organization

• Identify and address liabilities
• Promote safe and effective practices
• Secure employees’ commitment to improvement[2]

Risk management with regard to sustainability factors specifically is increasingly becoming a requirement to do business today. “Embracing sustainability is fundamental to managing a company’s risk profile and is essentially good business practice.”[3]

Getting Started

The first steps in making a risk management plan are

1. Gathering data

2. Identifying potential risks

“Risk management begins with data management. Integrating the fragmented data -from growth, acquisitions, and outgrown models – can lead to a more effective risk management strategy.[4] To that end, a business leader needs data from various areas in his/her organization, including

• Human Resources
• Budgeting
• Development
• Administration

After getting the data together, supervisors and employees can begin identifying organizational risks.  Common organizational risks include

• Employee turnover
• Poor communication
• Safety hazards
• Environmental vulnerabilities
• Economic factors

To help identify and organize potential risks, Businessballs, a free organizational development resource, offers project management templates, including a risk analysis template.  You will find the template on page 8 of this PDF.  The Center for Disease Control (CDC) also offers a risk management template, which you can access here.

Going Further

After identifying risks, the next step is to decide how best to mitigate them.  Employees can help devise ways to curtail risk, drawing from their departments of expertise to develop a plan of action to reduce risk factors.  In some cases, if a deeper dive is desired, a manager may wish to hire a risk management consultant from outside the company.

For a fee, project managers can use software programs to help them manage potential risks. The Nonprofit Risk Management Center has created a program to guide organizations through the risk management planning process.  SAS also offers RMP software.

Best Practices

Although best risk management practices vary depending on the organization, the CDC has identified eight best practices, which can be applied to any organization:

• Identify early
• Identify continuously
• Analyze
• Reprioritize
• Define and Plan
• Communicate
• Update
• Educate

Case Study

The London School of Business and Finance provides a series of short videos, which illustrate the importance of risk management planning.  The videos discuss Skytrain, a now-defunct airline that suffered from poor risk management:

Introduction to Risk Management by LSBF Global MPA

Conclusion

Creating a written plan for risk management maximizes an organization’s chances of weathering storms and positioning itself for long-term success.

Resources for More Information

Links:

Arup

BusinessBalls

Center for Disease Control (CDC)

Environmental Protection Agency (EPA)

ISO ReviewNonprofit Risk Management Center

SAS Risk Management Knowledge Exchange

Books:

Fundamentals of Risk Management

Strategic Risk Taking: A Framework for Risk Management

Glossary of Related Terms

Business Continuity Plan: A business continuity plan describes how an organization prepares for future incidents that could jeopardize the organization’s core mission and its long-term health. Incidents include local incidents like building fires, regional incidents like earthquakes, or national incidents like pandemic illness. For a sample business continuity plan, click here.

[1] Information retrieved from Nonprofit Risk Management Center website, http://www.nonprofitrisk.org/library/newsletter/0905.pdf

[2] From Sustainability: A Risk Management Perspective by David Singleton, http://www.arup.com/_assets/_download/download458.pdf

[3] List retrieved from Emergency Care Research Institute website, https://www.ecri.org/Clinical_RM_Program/Pages/Important_Questions_About_Risk_Management.aspx

[4] Information retrieved from SAS website, http://www.sas.com/knowledge-exchange/risk/risk-management-begins-data.html