Risk management strategies are essential in any organization, as they help to identify, assess, and mitigate potential risks that could impact the success or survival of the organization. They help organizations reduce uncertainty, improve performance, and achieve their objectives.
Recently, I read a Forbes article titled “Three Ways To Shore Up Your Risk Management Practices”. Having expertise in risk management, this article was an interesting read. It described some key steps an organization must take to streamline its risk management practices.
- Ensure Departmental Goals Are Aligned
By aligning departmental goals, organizations can ensure that everyone is working towards the same objectives, and risks are identified and managed in a coordinated manner, leading to a more effective risk management strategy.
“There are always risks involved when an organization takes on more expenses. The solution is to conduct a cost-benefit analysis for proposed expenditures to determine the amount of financial risk your organization is willing to take. Doing so will ensure that the goals of each department are aligned with the organization’s budget.”
2. Differentiate Financial Risk from Business Risk
It is critical to differentiate financial risk from business risk to determine which business areas require additional financing. To effectively manage both financial and business risks, organizations need to have a comprehensive risk management strategy that considers both types of risks. This strategy should involve identifying and assessing risks, developing risk mitigation plans, and regularly monitoring and evaluating risk management performance.
“Balancing financial and business risks is crucial for making better decisions and protecting a company’s long-term financial health.”
3. Make Adjustments as your Company Grows
With the growth of the company, it is important to ensure adjustments are made to protect against new potential and emerging risks. For example, creating new policies which suit the growing operations when expanding into new areas of business.
Read the original article here.
About Lloyd: Lloyd Emerson Johnson is a results-oriented strategic advisor. With over 40 years of international, broad-based experience, Lloyd considers various disciplines in his approach to management and board governance. Through effectively evaluating all corners of a business, Lloyd Johnson has reinvented the roles of a strategic partner and stakeholder champion. He is a creative visionary who transforms businesses to be effective throughout all of their operations and finances. The pragmatic leader specializes in risk management and ensuring that businesses are prepared for uncertain circumstances.
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