In the current era, organisations faced various risks while creating or developing business in the market. These risks include information technology security threats, the uncertainty of finance, natural disasters, errors in system and risks related to data. Thus, organisations require to mitigate risks in order to attain growth and profitability.
To manage risks, the large organisations formed risk management team, group or committee whereas medium and small organisations formed executive director to handle threats or risks. Apart from this, there are other members involved in small, medium and large organisations who can identify and assess risks in an effective manner. The members who provide help to business in mitigating the risks are volunteers, staff members, customers and other stakeholders.
Steps to mitigate risks
Risk management is a process to identify, access and control threats for the smooth running of business activities. Various steps are discussed below that helps the business to mitigate risks:
- Examine risks – In this stage, organisations identify the risks to solve it quickly. These risks can be in the form of financial, environmental, personal, reputational and medical risks.
- Assess risks – After identifying risks, the next step adopted by organisations is to assess risks. The risks can be assessed on the basis of frequency of risk occurrence and severity of consequences.
- Develop risk management strategies – Organisations consider appropriate risk management strategies for eliminating risks or threats that are detailed below:
- Risk avoidance – Organisations decide to develop a risk avoidance strategy for the purpose of avoiding disruptive consequences of activities of the business.
- Risk-sharing – Another risk management strategy adopted by a business is risk-sharing. In this strategy, organisations shared its risks with the third parties such as business partner or vendor.
- Risk retaining – Sometimes, organisations decide to retain a certain level of project risks. The purpose of retaining risks by organisations is to develop optimum utilisation of resources by creating maintenance in the workplace.
- Risk modification – In this strategy, organisations change or modify their professional activities to decrease the occurrence of risks. 4.Implement risk management strategies – It is the time to implement those strategies which are chosen by the business. In order to implement risk management strategies, organisations communicate its plan with staff members. The executives of organisations provide training to staff members so they can understand the rationale of a risk management plan. 5.Monitor risk management strategies – After implementing risk management strategies, the next step followed by organisations is to monitor the strategies. There are some questions that should be considered by the businesses:
- Is risk management plan is working in business or not?
- Are workers and other stakeholders’ follows a risk management plan?
- Is staff members need any re-training to know risk management strategies?
- Is a business should develop a better communication plan?