Identifying Operational and Systemic Risks Proactively Is The Key To Business Success

As an internal auditor it is very disheartening to see business processes fail specially when early interventions could have rectified most of the issues that lead to failure of business operations. It is extremely important for CEOs and Senior Managers to build an organizational culture where everyone understands importance of risk management and plays their role in effectively implementing risk mitigation strategies.

A well-researched and an easy to understand risk management framework incorporating policies, procedures, and reporting protocols can make a huge difference in ensuring a profitable business operation.

Steps for setting up a robust Risk Management Framework (RMF)

So ‘how to set up a Risk Management Framework (RMF)’ could be one of many thoughts running at this time in your mind. It is not as complex as you think it is. All you need is a powerful commitment, knowledge of risk management strategies and a willing team to secure your business. Given below is a 5 step process to get started.

Step 1: Analyse your business environment – take a closer look at your business values, who are your stakeholders, expected standards of performance and your regulatory environment. It won’t harm to check and see what your competitors are doing to secure their business.

Step 2: Review your current practices – do you have policies, procedures and protocols for your team members to identify and report loose ends, how many operational or systemic risks have been reported over the past 6 months, when was the last time you spoke to your team about how to identify and participate in risk management and what systems do you currently have to check for operational and systemic risks?

Step 3: Draw out an action plan – this is a crucial step in RMF architecture as it will guide you to identify, analyse, categorize, mitigate and monitor risks to your business. Your risk management action plan should incorporate a clearly defined scope, names of implementation team members with specific and shared responsibilities, communication protocols, meeting schedules, resources; including but not limited to risk categorization charts, risk identifications checklists, budgets, milestones and an audit schedule.

Step 4: Communicate your plan – let your team know what you are up to. This will help you to effectively engage people to implement your risk management plan. Keep the communication simple with clearly defined purpose. Ensure everyone in your organisation is aware of importance of risk management and what you and your team are doing to make the workplace safe and secure.

Step 5: Implement your plan – now that you have a risk management plan in place and everyone knows what you intend to do, do not delay. Get started and stick to your timelines. Remember every risk, no matter how small it may be, has a potential to make a big impact if not addressed on time and effectively.

It is simple. To sail through you must first know waters you are trying to get past, what have you got to stay safe in case of a storm and do your people know what to do when they are asked to do it.

If you and your team want to learn about systemic and operations risks to businesses and strategies to manage these effectively, consider a short course on ‘Managing risk’ offered by CIC Academy.

Written by Sameer Mathur,

Principal Consultant at Careers In Care