Be Prepared: The Key Benefits of Risk Management

Posted by Leslie Miiller
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You’ve worked hard to build a profitable and sustainable business. Your employees are devoted to ensuring your company’s success, and in turn rely on you to make their living. Over the years you’ve obtained a significant amount of assets including property, equipment, supplies, and probably most importantly—a reputation that attracts customers. Don’t you want to protect it all? Of course you do. That protection is often created in a risk management plan.

 What is Risk Management?

Benefits of Risk ManagementEssentially, risk management is creating a checks and balances system to ensure that in the event of an error, delay, catastrophe, or accident there are measures in place to protect a company, its assets, employees, and reputation. 

Unlike an insurance plan, which only comes into effect after a problem occurs, a risk management plan is put in place to foresee and prevent possible problems. For example, before a crew starts their day of work on a project, they gather together for a tailgate meeting. During that meeting, they discuss what needs to be done on the job, any possible hazards, review safety measures and OSHA rules that might be compromised, and allow job duties to be delegated. What might seem like an ordinary start to a day is actually a structured and strategic safety plan put together by the company to not only help ensure their employee’s safety, but as a form of risk management to also protect their tools, equipment, and work schedule.

 Who Benefits from a Risk Management Plan?

Put together correctly, a risk management plan benefits an entire organization, as well as satisfies plans for banks when credit line increases are needed, or insurance companies when more affordable plan options can be considered. A well constructed plan shows that a company is committed to mitigating risk and proactive management.

Internally, a well-developed plan can also form a chain of accountability, provide clarity for executive leadership where common mistakes are made, and allow for the creation of an internal audit system and operations manuals that will generate consistency and stability in duties and reporting.

Some may feel this is too rigid for their company culture; however, when approached in the right manner, employees feel engaged and empowered in their jobs knowing exactly what they are responsible for, deadlines they need to meet, and ways to report their progress. 

How is a Plan Developed?

To put it simply, a risk management plan:

  • Anticipates risk
  • Creates order
  • Reduces loss
  • Increases accountability
  • Protects assets, employees, and company reputation

Develop Risk Management PlanThough a seemingly simple formula, depending on the type of company or organization forming the plan, the variables are going to look very different. There is no great one size fits all solution, it must be customized and developed to fit the organization’s specific needs.

It is common practice for larger organizations to have an operations team in place that focuses on risk management plans and compliance. A smaller company may not have the resources or need for an entire department, but they can still create processes to manage risk. For example, having employees complete a daily checklist of their duties that management must sign off on, or having an independent firm audit accounting practices to help prevent fraud or expensive discrepancies.

Finally, ask employees for help in developing a plan. As the experts in their jobs. After all, they are the best resources for anticipating and preventing problems. By allowing employees to be a part of a proactive solution, they will not only provide guidance but will have an investment of their own in the program. This will create a culture of pride and esteem in their jobs, not to mention they are far more likely to take risk management seriously if it is their idea to begin with.

Be Prepared

There’s a reason the Boy Scout’s stand by their motto to “Be Prepared”. It provides a plan to safely and calmly survive when less-than-favorable circumstances present themselves.

Consider a risk management plan as a company’s way to follow that same motto. By creating a strategic and sound plan, your company will be prepared to protect its employees, assets, reputation, and more.

Topics: Your Bottom Line, Best Practices, Safety Culture, Leadership, Employee Engagement

Who We Are

PRECO Electronics is a global technology provider that improves safety for operators, worksites, and the public. The effectiveness of our object detection radar systems is unmatched in heavy duty vehicle industries.

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