Whether crossing the road, investing in financial products or choosing your lunch, life is full of risk. You can't remove it, but you can contain or mitigate it.
Key takeaways
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A survey identified the biggest operational risks facing companies, with many of the biggest concerns relating to compliance: adhering to data privacy laws, inability to deal with cyber threats, regulatory change and scrutiny of operational resilience, products and services.
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Our 10 top tips on how to improve risk management:
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Be clear about your remit
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Identify risks early on
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Be positive
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Describe risk appropriately
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Estimate and prioritise risk
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Take responsibility and ownership
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Learn from past mistakes
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Use appropriate strategies to manage risk
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Document all risks in a register
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Keep monitoring and reviewing
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Risk is inherent in everything we do: skills shortages caused by a failure to fill vacancies, a drop in currency value because of market uncertainty, fines and financial risk due to a failure to comply with regulations.
Indeed, whole industries, such as insurance and gambling, are founded on risk management. Because of its evolutionary nature, risk can change, as can our perceptions.
Risk management at work
- What are the biggest operational risks?
- 10 Top tips on how to improve risk management
- Improving risk management at work: FAQs
What are the biggest operational risks?
A global C-level survey identified the biggest operational risks facing companies, and many of the biggest concerns relate to compliance:
- Complying with data privacy laws
- Inability to deal with cyber threats
- Regulatory change and scrutiny of operational resilience, products and services
- Economic conditions
- Pandemic-related market conditions on demand
- Adoption of new technologies requiring new skills in short supply
- Leadership succession challenges and the ability to attract and retain top talent
- Resistance to cultural changes may restrict the need to make necessary adjustments to the business model and core operations
- Inability to compete with 'born digital' competitors
10 Top tips on how to improve risk management
Risk management involves understanding and analysing risk to ensure organisations meet their objectives in the corporate world. So, how can you improve risk management in your company?
For starters, build a strong risk culture. This involves conducting effective workplace risk assessments, developing a risk management plan, improving employee engagement in risk management practices, and creating a risk strategy. Then, incorporate the following top tips.
1. Be clear about your remit
Gaps in responsibilities across your organisation increase risk. Ensure everyone knows exactly which part of the business they’re accountable for and which activities and tasks.
2. Identify risks early on
It's never too early to start thinking about risk. The sooner you do, the easier it is to manage. Think about risk management at the outset of every project or task. What early warning indicators (EWIs) can you track for different risks? Embed risk management into your work processes and corporate culture.
3. Be positive
Not all risks are negative, so don't only focus on the downsides. They can also be positive, presenting opportunities and enabling you to take advantage of a given event or situation.
4. Describe risk appropriately
As part of the risk assessment process, creating a risk 'string' is good practice to distinguish between cause and effect. Also, describe risk appropriately and clearly to all employees.
5. Estimate and prioritise risk
Use a matrix to assess and prioritise all known risks. You can calculate risk severity by looking at the probability (likelihood) and impact (severity).
6. Take responsibility and ownership
If you see something is wrong, such as a potential safety issue, suspected fraud, or a security breach, take responsibility rather than waiting for someone else to deal with it. Risk management works best when everyone is empowered to speak out and take action.
That said, employees may exhibit non-compliant behaviour for several reasons: deliberate, unintentional, personal red flags and vulnerabilities in job roles.
7. Learn from past mistakes
Use historical data and anecdotes to learn from past mistakes and ensure they’re never repeated. Past trends can inform better decision-making going forward.
8. Use appropriate strategies to manage risk
Use the 4Ts model to decide how best to manage risk. This involves:
- Transferring risk – Assigning an individual, group or third party to be responsible for it
- Tolerating risk – No action is taken to mitigate or reduce risk (it still needs to be monitored)
- Treating risk – Controlling risk through actions that reduce the likelihood of its occurrence or minimise its impact beforehand
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Terminating risk – Altering processes or practices to eliminate it
9. Document all risks in a register
By capturing all risks across the company, you’ll see the bigger picture of your entire exposure, improving your information sharing and accountability. Remember to document who’s responsible for what and appoint a risk owner, too.
10. Keep monitoring and reviewing
The level of risk you face is continually changing, with new ones emerging and others becoming less critical.
By being proactive and regularly monitoring your exposure, you’ll be ready to act when the time comes. So, it’s important to have a risk management process in place.
Part of that requires risk management training, not just for leaders, but everyone. Staff need to learn how to recognise what constitutes risk so they can help manage it.
Improving risk management at work: FAQs
What are the benefits of effective risk management?
Effective risk management can help you identify potential problems earlier, reduce losses, support better decision-making and improve business resilience. It can also assist organisations to meet regulatory and compliance requirements.
What is a risk management framework?
A risk management framework is a structured approach to identifying, assessing, managing and monitoring risks. It provides a consistent way to understand your exposure and determine how to address risks.
What’s the difference between risk assessment and management?
Risk assessment focuses on identifying hazards or risks and evaluating their likelihood and potential impact. Risk management is broader, covering the processes and controls used to respond to, monitor and review those risks.
Want to learn more about risk management?
If you’re looking for focused training, browse our risk management courses – we offer a complete solution for your compliance programme, including IIRSM-approved modules. Our topics include:
- Conduct Risk
- Credit Risk for Financial Firms
Our e-learning courses are designed to engage employees, including our microlearning library, which supports knowledge retention.
Our Compliance Portal also features a range of tools to digitise and automate your compliance learning. These include our:
- Learning Management System (LMS)
- Policy Hub
- Compliance Registers
- Compliance Surveys
- Compliance Declarations
- Aida by Skillcast
If you’d like to access leading insights and compliance tips, browse our free resources by topic to find guides, modules, compliance bites and more.
Written by: Lynne Callister
Lynne is an instructional designer with over 20 years' storyboarding experience. Her current areas of interest are mobile learning and exploring how cognitive theories of learning can create better learner experiences.
