The principles of risk management have been developing over many decades now. The value creation and protection of assets including the lives of employees has been one of the major achievements in terms of risk management and associated framework.
Value creation comes from providing a mechanism for everyone who may be impacted by negative risk outcomes. We still have a long way to go, but the established risk management frameworks are not only protecting businesses but state and federal based organisations. In this article, we will go through many of the positive outcomes but also identify negatively passive outcomes, which could be said to revolve around the cultural aspect of the different organisational demographics.
Looking to the future of risk management with leadership and commitment.
Bringing people together with the objective of keeping them on a similar risk management pathway will improve integration within safety systems. Allowing innovation and design that not only protect employees but the longevity of a given business.
At times its difficult for owners and senior management to see through the haze of risk management frameworks. Furthermore trying to determine effective implementation strategies that work but, somehow, don’t impact the viability and bottom line of business. Such frameworks can be hard to understand and identify their significance. When the outcomes are working well we see less trauma associated with risk. If the risk management framework was dismantled it would be then quite obvious, by the increase in safety issues, that without such risk management tools the likelihood of future business sustainability would be reduced.
Constant evaluation and commitment to systems and processes will place leaders in a good position to provide local mechanisms for achieving viability of every system. Whether administrative or operational by nature. Ensuring such systems are on a usable and workable pathway will see methods of evaluating such systems become more effective over time. One of the potential barriers here being an inability of a specific manager to appropriately document the pathway for future managers to create value and move in a direction which is aligned to the organisational risk management framework objectives.
Constant improvement requires that the documented pathway has outcomes that everyone can understand. Without such improvement, the process and systems are likely to stall at the implementation phase.
Understanding the organisational context by design.
It may seem obvious that every business across Australia is different, but all too often we use systems and processes that fit other businesses and not ours. Its inefficient to double up on activities across industry sectors but designing safety systems which are contextualised to specific environments will ensure that the implementation is improved and integrated into the local systems of work.
We have generally spoken of risk frameworks with some physical aspect to the process, but what about dealing with risk when something doesn’t go as planned. I.e. a bushfire impacts our business directly. Even Though the impact may only be a reduction of customers the potential risk to viability could be substantial. So a holistic and contextualised program of risk management can better prepare organisations to ensure business continuity when the unexpected happens. Testing of such systems over time will better prepare risk managers to identify needs and mitigate such risks.
Relationships will always determine how effective policy can be implemented. I.e. including and encouraging community participation in preparedness, response and recovery. Facilitates far better recovery outcomes during disasters. Emergency management organisations around the world (including FEMA in the USA) are finding communities recover far quicker when they are included in programs. Every person likes to be valued and included so where businesses build over-structured silos the only outcome can be fragmentation. An example of this is the way state-based emergency services use a top-down control and coordination approach to emergency management. This can only work to fragment communities and increase recovery timeframes.
Most people won’t react well to being isolated from their communities during times of disaster. The feeling of helplessness will be overwhelming and reactions very difficult to manage.
Communication and Articulating Risk management outcomes.
Risk managers who create a pathway which always moves forward in a positive manner will have only achieved part of the organisation objectives. Communicating a commitment and associated pathway to internal and external stakeholders becomes even more important in terms of implementation. Apportioning responsibility and accountability sound good in terms of management structures, but where organisations embed such risk management processes in culture and every decision made from the CEO to the most junior employee. All parts of the organisation will feel empowered to be accountable and responsible for the risk management framework.
Are risk analysis and risk evaluation the same?
In many respects, these to term are the same. Even so, one can’t be done without completing the other. This fact suggests that the process of risk management is like a “merry go round”. Risk managers are facilitators who contextualise the process and keep everyone on the metaphorical merry go round.
As risk is contextualised and a basis for the assessment, evaluation, treatment and monitoring/review becomes part of the process. The consequences and likelihood of impact will be minimised within acceptable limits. We may even use the insurance industry to further decrease risks to an organisation’s viability.
Managing risk will always be based on principles, a workable framework and systems and processes. With consideration given to communicating the risk management framework message and overcoming barriers within an organisational culture. Governance and leadership are important in terms of setting strategies which involve every part of an organisations or communities internal and external representatives.