Risk! Doesn’t every step and work of the day involve risk? Be it slipping while getting down your stairs or lifting an object, walking on the road, traveling, everywhere. Can we avoid them? The answer is no. But we can surely be cautious about them and remain careful thus minimizing them.
Similar situations apply in businesses as well. Any decision being taken or every project being taken up comes with a risk of failure and losses. Can business risks also be mitigated? Yes. By following the below-mentioned pointers, you can mitigate the risk, if you cannot eliminate it.
Make a Plan: Depending on your business requirements, make a plan for managing risks. This plan should be made considering:
- List of each risk
- The scale on the impact of each risk
- Measures being taken to control these risks
- Future plan of action
Identify and Analyze: Come up with questions like why, how, and what is impacting the business. Is the problem internal or external? Use appropriate human and technical resources to identify the risks. This will also help you in finding out the benefits of some of the risks that the organization is taking. Analyze the impact of each risk on revenue, customers, and overall impact.
Evaluate and Treat: Scale them or color-code them by priority and the impact that they bring on the business. Which of the business or team is bringing in the maximum impact on business, whose impact can be managed, and whose is negligible. Accordingly decide to dedicate the additional resources or replacement of resources, if required to reduce the impact of risk. Start with treat the worst risk first.
Strategize To Manage Risk: The common business practice is to follow one of the below-mentioned risk management models based on the likelihood and impact:
- Transferring Risk: Assign it to a different individual, group or outsource it to manage the same.
- Tolerating Risk: Continue monitoring it to assess it further.
- Treating Risk: Take or change actions to control or minimize the existing risk.
- Terminating Risk: Remove the risk completely by changing the process and practices.
Continue to monitor and review the processes and progress which might alarm you about the new risk which might propagate. Knowing or assessing the risk in advance always helps in reducing the negative impact that it may cause.
Clear Communication: Ensure that each individual has understood their role, responsibility, and accountability related to the assigned task. Misses in clear communication may lead to ambiguity which can be a threat to the generation of negative risk factors.
Documentation: It is difficult to assess the impact of smaller risks. Documenting all the risks involved will help you in analyzing the bigger picture of the entire process. Providing documents with related responsibilities and accountabilities is also a good practice.
Impact: Analyzing or assessing risk does not mean that the impact will be negative only. It can have a positive impact as well. This will help you to implement the same strategy which can help in mitigating the other risks with negative impacts. You can always share the best practices across the functions and lead by example.
Conclusion: It is always good to assess the risk at an early stage and take the required action to mitigate the same. While doing this, many of the managers at times miss on aligning these risks with business goals and objectives. Risk management should be taken as a prediction power to the continuous improvement of the organization while keeping the budgets, plans, goals, intact. This should not hinder the actual deliverables. Consider using the best project management software available to give you the overall report that will help you in assessing the risks on a timely basis.