RISK MANAGEMENT MEANS MORE

What is risk management?

In our personal lives, we often evaluate risks on the fly, but for organisations, risk management is a formal process that follows pre-determined steps. Risk management describes the process of identifying, forecasting, analysing and controlling risks inside and outside of an organisation. Effective risk management takes the whole company as well as its context, including legal frameworks, into account.

Risks and hazards to organisations can come from many different sources – data breaches, natural disasters, regulatory and legislative changes or supply chain disruptions, for instance. To manage these risks, organisations set up action plans in accordance with their assessment to avoid or mitigate the hazard. For the analysis, risks are categorised and prioritised according to likelihood and impact.

Why is risk management important in the workplace?

Risk is ubiquitous, and organisations know this. In a survey of over 400 CEOs and board members by Deloitte, 95% of them said they believed their organisation would face serious threats within the next two to three years. With digital and environmental threats on the rise, companies often need to react quickly to ensure risk mitigation. Without a previous analysis and strategy in place, this can be impossible, setting organisations up for loss of revenue and possibly even failure, making the lack of a risk management strategy potentially catastrophic. By anticipating and planning for risk, organisations protect themselves and their stakeholders.

While Chief Risk Officers (CROs) are often only found in the financial industry, risk management is vital to all industries. Understanding and implementing systematic risk analysis and management is a vital skill in a risk-prone world. No matter the industry, all organisations profit from effective risk management as it increases their resilience, protects their reputation and enables them to plan more confidently for the future.

In recent years, risk has become a more prominent focus for many organisations. As a result, risk management skills are in high demand, and the increased uncertainty around digital and environmental threats is likely to keep driving this demand well into the future.