Managing Risk
Posted on 13 Sep 2024
A crisis can expose gaps in a business’s risk management processes and highlight new risks that need to be addressed.
We’ve had to quickly respond to new risks in recent years, without the luxury of planning and preparation. While it may be impossible to predict all potential risks, we can still review our business, address identified risks, and prepare for whatever the future may hold.
While risks and opportunities exist throughout all departments of a business, it’s the responsibility of the directors to manage them. Small and medium-sized businesses are no different to publicly listed companies where the function of directors is to maximise shareholder value.
The key responsibilities of the director role include:
- Setting the company’s vision and strategy.
- Providing legal and fiscal oversight.
- Making a plan for business growth.
- Improving the business model.
- Overseeing business performance.
- Establishing the appropriate organisation structure to deliver on the above.
As well as maximising shareholder value, these strategic responsibilities contribute to the overall risk management strategy for the business. The best way to manage risk involves documenting and regularly updating a Risk Management Plan and Risk Register.
Looking at each department of the business, the Risk Management Plan will help you identify, assess, and prioritise risks, and set goals and actions to mitigate and monitor them. The Risk Register will help you record the risk management process.
No matter the plan, as a director, you'll need to ensure regular meetings are held with your team to discuss and monitor progress. To ensure the Risk Management Plan is monitored and updated, have someone provide an independent voice of accountability. They can add their expertise and experience, providing the business with the best chance to succeed before, during and beyond any crisis.
“He who fails to plan is planning to fail.” - Winston Churchill
