These 7 Risk Management Steps Can Be Revolutionary For Your Business

Risk Management
Risk Management as a 9 Year Old

After all my years in business, I never thought I’d be using risk management to discuss whether or not my 9-year-old daughter should jump off of her bunk bed.

My husband had just switched jobs within his company, and my daughter wanted to know how he decided to make the change. We started to explain the risks to consider when making such a big decision, and she asked, “So it’s like how I’d like to try and jump from the top bunk to the queen-sized bed?” We agreed with her and asked, “What would you have to worry about? What’s the first thing in your way?”

She thought about the layout of her bedroom, which has a double over double bunk bed and a queen- sized bed that are separated by about 6 feet. “The ceiling fan.” “How do you avoid hitting it?” I asked. “I’ll move over to the head of the bed, but I’ll have to take the side rail off. And I could pull out the trundle under the bed.” I agreed that the trundle would help to cushion the fall if she missed the queen bed. “And I could put pillows around the wooden edges of the trundle,” she added.

Once she’d clearly thought out a plan that included risk avoidance and mitigation, I reminded her, “You can only prepare so much, but then you have to leap. Hopefully you understand the risk and the reward while you’re leaping.”

Risk Management Every Day

We all employ risk management every day, from deciding which route to take to the store to choosing the shoes we put on in the morning. Every government agency has risk management strategies – NASA has one that’s on steroids – and big businesses rely on them to operate.

Risk Management Plan

All businesses, no matter what size, could really benefit from having a risk management plan. Small businesses need to put some effort into thinking about what can go wrong and how to handle it. These 7 steps can help you tackle the risk that could be keeping you from your reward.

Also Related: The Love Risk I almost Didn’t Take

  1. Identify the risk. This can be a list of minor or major things that could get in the way of your company’s goals and objectives.
  2. Assess the impact of the risk. This is the time to decide whether you’re going to avoid the risk, mitigate it, accept the risk and do nothing, or call in an expert and share it.
    • Avoiding the risk: The risk is too high and you’re not going to take action, or you’re going to change your goal and objective.
    • Mitigating the risk: You’re going to put the pillow out and try to minimize your fall. This might be through buying insurance, giving your staff extra training or spreading the risk out.
    • Accepting the risk: You realize that it’s not always bad to have risk. You’re betting that you’re going to beat the odds and the risk isn’t going to destroy you.
    • Sharing the risk: You might turn to people who have more expertise in an area than you, such as legal issues. When it comes to writing policies, you’re going to hire a lawyer to protect your legal interests.
  3. Prioritize those risks. You want to take all of the risks and impacts and arrange them in the order of most likely to happen to not likely to happen. You might not care about some of them at all. This is when you decide how much risk you want to tolerate. While my daughter may get a huge rush of joy from leaping off her bunk bed, I’m not willing to do it because the risk of pain isn’t worth it to me.
  4. Create the plan. Plan how much risk you are willing to carry by taking the prioritized list and design options on how to avoid the risk, mitigate the risk, share the risk or accept the risk. Your plan should include a list of strategies on “what if” scenarios and the action that you want to take as situations unfold.
  5. Implement and take action on the plan. Follow your plan and put policies, training, and process in place that help you meet your risk tolerance level. These can be done in segments or steps.
  6. Monitor the results and get the feedback. As the plan is being implemented be sure to think about ways to monitor the action taken and collect information about the results of the action.
  7. Reassess and adjust the plan. Plan to look at results at least once a year. Some companies review these quarterly. Do what works for you. This process isn’t static. The goal is to try to plan the best you can, taking the risk into consideration, and when a crisis pops up, you decide how you’re going to handle it. It’s not necessary to spend a lot of time on this, but it’s worth giving it some thought, especially if you’re trying something new.

Applying these steps will help you to better understand the risks you’re taking in your business and in life which makes the risk vs reward decisions much easier.

What risks has your business had to face?

Karen Que headshot for MNCThis post was written by Karen Que. Karen Que is a lifelong entrepreneur, business woman, wife, and mother who is on a mission to make her family a priority while enjoying immense business success on her own terms. Karen loves to break the mold by helping small business owners create an explosion of growth without losing their sanity. As the Founder and CEO of Q infusion LLC, she works together with small business owners to build their CEO skills, implement systems that create stability, and infuse big business thinking and strategy into their growth plans. To find out more please visitwww.qinfusion.com or be social @qinfusion  You can connect with Karen on Twitter and Facebook.

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    These 7 Risk Management Steps can be Revolutionary for Your Business | Q infusion LLC
    October 13, 2016 at 11:18 AM

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