In the first part of Risk Management 101, we focused on the foundational elements of risk management. In part two, we’ll look at how the people who keep your organization running, with their unique insights, skills and emotions, play an essential role in this complex landscape.
Everyone plays a role in managing risk
Risk management isn’t one team’s concern, so keep those communication lines open. A collective understanding of potential risks sets a strong foundation. Conduct surveys, engage in brainstorming sessions and encourage a culture where everyone feels empowered to voice their concerns and share their insights.
Elements to consider for effective risk management collaboration across different teams:
- Operations and supply chain: It's all about maintaining a smooth flow. By staying in close communication with suppliers and anticipating potential delivery issues, teams can ensure there are no unexpected interruptions. It's beneficial to always have a backup plan, so when hiccups do arise, you’re already steps ahead.
- IT and cybersecurity: A proactive approach goes a long way. By staying informed about the latest cyber threats and conducting regular system checks, IT teams can keep the company's data and infrastructure safe. This isn't just routine – it's the most important risk factor of running a business in the digital age, so the whole organization has to be aware of and invested in managing this area of risk.
- Human resources: The wellbeing of the team affects the whole organization. Regular check-ins, surveys and addressing any concerns promptly can help in avoiding larger issues and people-related risk down the road. Recognizing and acting on these insights keeps morale high, talent retained and operations smooth sailing.
- Sales and marketing: Feedback from the field is gold. By actively listening to customers and keeping an eye on competitors, these teams offer early warnings about market shifts and any problems in important client relationships that might crop up. This real-time information can be crucial for adjusting strategies on the fly.
- R&D and product development: Innovation doesn’t exist in a vacuum. Regular brainstorming sessions can help the team anticipate industry challenges, ensuring that the next big thing is truly groundbreaking and not just a fleeting idea. It also gives you a starting point to check your sales and marketing is in alignment with the reality of your product.
Risk management – thinking about human impact
Beyond the operational and strategic benefits, understanding the emotional and psychological implications of risk can pave the way for deeper, more impactful decisions focused on how risk affects people inside and outside your business.
- Embracing vulnerabilities: Going beyond accepting risks at face value and avoiding the action that leads to it in the future. Imagine a leading software company receiving feedback on its latest release. The release saves overheads, is more secure and is easier to update, but feedback from users is overwhelmingly negative. Instead of deflecting or ignoring this feedback and waiting for the customer base to get used to it, the organization could openly admit areas for improvement and open up new means to receive feedback and prioritize which features are causing the most complaints. By actively addressing and refining those issues, they not only enhance their product but also reinforce trust over time with their users.
- Changing strategies: Being adaptable doesn’t just mean rolling with the punches, and confronting risk sometimes requires taking risks. Think of a small online retail business that starts to see a decline in sales because of changing consumer preferences. Instead of sticking to their tried-and-true inventory, they delve into market research, putting more effort into exploring and updating their product range based on customer desires. Nimbleness turns a potential risk into an opportunity for growth.
- Empathy in action: It's not just about managing a brand's image; it's about recognizing and valuing the human experiences intertwined with the business. When an organization faces backlash for a decision, they might initiate community-focused events or forums, not simply as a PR move for damage control, but as a gesture to listen to and understand concerns to avoid a repeat. By actively engaging, they demonstrate a commitment to their values and create an opportunity to strengthen trust.
Analyzing risks: more than just numbers
When diving into risk analysis, remember that risks aren't just abstract concepts – they have real-world implications. Here's how to go about it:
- The power of data: Data-driven analysis forms the backbone of understanding risks, but it goes further than statistics and percentages. Qualitative data is a powerful form of data that helps you measure the impact of your organization’s actions on people. Collecting relevant data of this nature, for example from past incidents, market studies, product reviews and feedback loops, can help you get a full view of potential risks from all relevant data sources.
- Tools and techniques: Employing tools like SWOT analysis – i.e. looking at your strengths, weaknesses, opportunities and threats – and putting together risk matrices can give you a structured way to visualize and weigh risks. But remember, it's not just about the tools. The interpretation of the results, and perceptions of those results, are just as crucial. Consultants and experts around risk are a useful avenue of making sure you are getting the most of your data, and that you are aligned with the real risk landscape of your business. However, much of the actions already embedded within your business – such as employee satisfaction surveys, downtime assessments or the nature of complaints concerns reported by employees – are all great risk indicators to include in your risk management processes.
- Embrace subjectivity: While quantifying risks is important, some risks might be more subjective based on intuition or experience. These insights, especially from seasoned team members and completely fresh eyes, can provide valuable perspectives and suggestions you may not have considered before.
Embracing the full spectrum of risk
Managing risk is as much about understanding people, their strengths and how to keep them safe as it is about process from a purely operational point of view. Though complexities including legal, cybersecurity and financial risks can feel distant from the human impact, organizations don’t exist in a vacuum. Every risk impacts a person or people, so reminding yourself of this fact can add depth to your understanding of risk and how best to manage it.
For more insights into your unique risk profile and to unlock new ways to navigate the business landscape, explore NAVEX integrated risk management software today.