Don't just tick the box of risk management - think outside it. It's where real value lies.
As kids we’re taught to avoid risk but embracing it may be the best thing you can do for your business.
Risk management is a day-to-day part of running a business, but many SME are failing to manage their risk effectively, resulting in reduced productivity and even profitability.
Look through negative perceptions
“There is a perception that all risk is bad in business and that ‘managing’ it is just about compliance,” says Alf Esteban, Chief Executive Officer of risk management company Protecht. “Consequently many businesses look at it as something they have to do, a box they have to tick, without seeing the value of it.”
In fact, placing a higher value on risk management is one of the best things you can do to ensure your business flourishes.
“Risk is the effect of uncertainty on objectives,” explains Alf. “Things that might result in a business not achieving its objectives are negative risks but there are also those things that may occur which may end up enhancing or accelerating the achievement of those objectives, and that’s positive risk. Risk management is about minimising the negative and accelerating the positive.”
Understand your appetite for risk
Alf suggests starting with the fundamentals: understand what your objectives are, identify the material things that could go right or wrong, and articulate your “appetite for risk” (how much you are willing to lose to achieve your goals) across different areas of your business. Once you’ve identified the areas of risk, put in place controls that are relevant and meaningful. Finally, monitor those controls on an ongoing basis.
“Risk management isn’t one of those things that you do just once a year then forget about,” Alf says.
Where to go for help
While there are many resources available to help you develop your risk management skills, from books to e-learning modules, enlisting the services of a professional risk management company such as Protecht can be helpful for implementing the systems you need to manage risk on an ongoing basis.
“Embedding risk management techniques is probably the hardest part for any organisation, because it potentially means getting people within that organisation to do things they don’t necessarily want to do,” says Alf.
While change may be difficult, the results speak for themselves, he adds, citing the example of a government client who reported an 80 per cent improvement in the efficiency of its service delivery after implementing Protecht’s risk management strategies.
“They’re seeing fantastic results from using our system,” Alf says.
For more information on Protecht, visit their website
or call 02 8005 1265.