Risk is inherent in almost every activity carried out by people on a daily basis. Michael Saltzstein mentions that the risks involved in the corporate landscape are numerous; skill shortages, market uncertainties, fines and financial contingencies, and failure to comply with regulations are some of the most common ones. Michael is a visionary leader of global risk services, and hence is well acquainted with the diverse risks faced by modern businesses, as well as the means to mitigate them.
Michael Saltzstein underlines some ways through which business risk management capabilities can be improved.
Risk management basically implies to the process of identifying risks, evaluating their potential impact, and taking the steps needed to mitigate them. According to Michael Saltzstein, there are a variety of internal and external risks that pose a threat to the objectives and strategy of a business. If a company does not have a proper risk management plan in place, it is highly likely that they would end up suffering due to these internal and external risks.
It is never too late to adopt a comprehensive risk management plan that provides the needed assurance and confidence to a company in terms of incident prevention and management. Here are some of the ways underlined by Michael Saltzstein through which the risk management capabilities of a company can be improved:
- Be clear about responsibilities: Any gaps in the responsibilities assigned across the business provide an opportunity for increased risk. One must make sure that every member of their company knows exactly what tasks and duties they are responsible for.
- Identify risks early on: It is never too early to consider risks. In fact, the sooner people are able to identify various risks; the easier shall it become to manage them. One should try to determine the major risks involved in a task or project before engaging in it. Modern devices and tools like Early Warning Indicators (EWIs) can also be used to track diverse types of risks. Risk management must be proactively embedded into the work processes and corporate culture of a firm.
- Be positive: It is important to note that not all risks are bad. In many situations there can be an upside to a risk as well. There are several types of risks that present entrepreneurs with great opportunities and allows them to competently leverage a given event or situation.
- Estimate and priorities risk: A risk matrix tool can be used to properly assess and prioritize discerning types of known risks. One may even calculate the severity of a risk by checking out both its impact and probability.
- Take responsibility and ownership: If an entrepreneur notices something wrong in their business, like a potential safety issue, they should take proactive steps to solve the problem at hand rather than waiting for it to get severe. Risk management works best when everyone is empowered to take prompt action.
Proper risk management is crucial for businesses of all types and sizes.