How companies are destroying success because of poor risk management
In today’s world, companies worry so much about legal and regulatory requirements that they focus on risk avoidance rather than risk management. This is a huge problem because it means that they aren’t managing strategic risks for growth and operations which are essential for business success. A lot of companies are putting risk avoidance measures in place and them leaving them to work their magic. The problem with this is that no one is managing risks.
Why is it important to manage risks rather than completely avoid them
A recent article published in the Harvard Business Review stated that 60% of Corporate Strategy Officers that they surveyed said that their company’s decision-making process is too slow. This is in part because of an excessive focus on preventing risk, however, if this “organisational drag” were reduced, the rate of revenue growth might double. Just 20% described their companies as “risk-seeking.” Basically, risk management professionals are spending too long on admin to avoid risk. This means they are ruining productivity and therefore revenue. But even though risk is bad it is essential for big rewards. The less risk that you take as a business the less reward you will achieve.
Help your staff to make better decisions on the spot
The key to speeding up your decision-making process is to empower your front-line employees to make wiser decisions. There are two ways to do this.
Number one – provide them with real-time data to help them make informed and smarter choices. Oplift’s visual analytics allow you to discover trends and problems across your business as a whole. You can drill down the detail to look at a specific store, location or person. The platform allows you to discover insights to strengthen your business operations.
Number two – Train your employees in risk management. In the training, you should be boosting their confidence to properly assess risk and make better decisions. Look at which departments face a lot of high-risk decisions, the people in those departments should be properly trained in risk awareness.
Emphasis the importance of logical thinking rather than processes
Processes are still very important for minimising risk but they shouldn’t override common sense. For example, your process for anti-money laundering is a monthly learning quiz and a policy acknowledgement. Although this is important it might not reduce risk. Employees need to be able to spot potential problems, assess any risk and be empowered to make a decision.
Change your organisational structure
In order to stop your risk department from working in a silo and slowing down changes that can be made. You should get your Risk Managers to report to your Chief Operating Officer or your Chief Compliance Officer. This way, responsibility is spread throughout your organisation. Ensure that your departments are all using the same platform so that risk management solutions can easily be rolled out to everyone. The aim here is to manage risk across every department in your business, not just one. For example, Oplift’s platform encompasses learning, task management, compliance, health and safety, internal comms, risk management and on-boarding into one solution. This makes it easy for departments to work collaboratively to minimise risk.
To conclude, employees need to feel more comfortable with risk, they shouldn’t panic or avoid decisions when they are needed.
If you are looking for a risk management solution which can help you minimise risk and train and empower staff get in touch. Discover how Oplift can improve your risk management and create a culture of safety.
