…Given the ever growing complexity of the business world lately, particularly as a result of so many shifts in the business market over the past decade, it has become imperative that those organizations lacking risk management programs, or who have programs that are perhaps less well developed than they should be, begin investing the necessary time and resources to ensure that they are protected from any and all threats that could rise up to endanger their business. So, moving right on from the previous half of this article, here are eight more guidelines for the effective development of a thorough risk management program.
9. For the next step in the process, companies will typically lay out a table to be used in the division and ordering of threats once they have been assigned values for their impact and probability, in order to assess the overall risk of each factor. Unfortunately no standard formula exists for this purpose, so it falls to those in charge of the development of this program to create their own guidelines in this matter.
10. Once a standard equation has been set for the allocation of risk to each possible threat, a list will need to be drawn up putting each of these threats in order based on the magnitude of the risk involved.
11. For this next stage in the process, it will be more useful if a numerical value has been assigned to each threat in the previous stages, as it is now necessary that these risks be compiled and computed in order to determine average risk level. Should a non-numerical system have been used this can be easily amended at this stage by assigning number values to the list created in the previous step.
12. Next, strategies will need to be laid out for the mitigation of each of these threats by finding ways of averting them. Here it is important to start with those threats at the top of the list which pose the greatest danger to the organization and work down, saving the less worrisome factors for last.
13. However, even with mitigation strategies made, it is still important that companies take the time to consider just what might happen should any of these threats be unavoidable. For this reason, it is necessary to develop contingency plans in order to avoid bearing the impact of the potential damages that each threat might produce.
14. Once strategies have been designed, it is then important that the efficiency and effectiveness of these strategies be computed in order to ensure that the most effective route has been laid for avoiding as much risk as possible, and then a new rating will need to be assigned based on these assessments.
15. Once a new set of values have been assigned to each treat, step eleven will then need to be repeated in order to recompute the overall risk level. From here, the previously computed value and the new one can be compared to determine how effectively the companies’ strategies will work in reducing these threats.
16. Once all threats have been accounted for and planned against, the final stage of the process is for the company to set up a team to monitor those risks that have already been acknowledged as well as keeping an eye open and an ear to the ground for any new threats that may arise. It is important to remember that effective risk management is all about staying one step ahead.
Published by Conselium Executive Search, the global leader in compliance search.
