What is a Risk Management Plan and Why do you Need One?

According to Australia’s business.gov.au website, a risk management plan sets out the strategies and the processes you’ve put together to help you manage any risks associated with running your business.

Typically, a good risk management plan should:

  • Ensure that risk management becomes a priority at all levels of your business
  • Create a clear flow of information so you can identify and deal with risks
  • Enable you to quickly respond to changes in your business environment, and help you make decisions.

Identify your focus areas

Before setting out a risk management plan for your business, you should consider which areas of your business it will refer to. For example, you might only be interested in hazard based risks. Some of the internal and external things to think about when creating your plan are:

  • social, cultural, political and regional issues
  • economic, technology and competitive trends
  • government policies and law
  • your business aims, policies and strategies.

Commit to your plan

Some business owners don’t see risk management as an important issue. However, committing to quality risk management can help you to create a stable business that’s prepared for unexpected events.

As a business owner, it’s a good idea to:

  • make sure that your business aims and risk management plan are linked
  • clearly describe your risk management plan to everyone involved in your business
  • show support for risk management
  • set up a way of measuring the success of your risk management plan
  • regularly check that your way of measuring is giving you useful information
  • make it clear who’s responsible for what
  • provide enough resources at all levels of your business
  • ask for feedback from everyone involved in your business, including customers and suppliers
  • use the feedback to update your plan
  • explain risk management to new employees and in training programs.

Consult with stakeholders

Your risk management plan will be more specific and useful if you ask for feedback from your stakeholders. Stakeholders are people, businesses or organisations that:

  • are affected by the actions of your business
  • can affect your business with their actions.

Stakeholders of your business can include:

  • employees, contractors and sub-contractors
  • clients, customers and suppliers
  • business financiers, investors and insurers
  • your local communities and local media
  • government agencies.

Consulting with stakeholders will help you to:

  • work out what your business considers as high and low risk
  • get support for your risk management plan
  • bring together different views and areas of expertise
  • keep your risk framework up to date
  • respond to unexpected risks.

Work out your risk criteria

Once you’ve gathered all the information you need from your stakeholders, it‘s time to decide on the risk criteria for your plan.

You should state the level and nature of risks that are acceptable or unacceptable in the workplace. Risk criteria set a standard you can use to assess risks to your business.

Example: John’s story

John runs a construction business. While creating a risk management plan he identifies safety of his employees as one of his main business aims.

After talking with employees, contractors and clients, he sets his acceptable level of risk for safety procedures to zero. In his internal risk policy, he notes that safety procedures must be upheld at all the times and that no injuries or fatalities are acceptable.

He makes sure all his stakeholders are aware of this policy. He provides safety training for his employees and explains who is responsible for specific safety risks.

Contractor Management 101: Definitions & Basic Concepts

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Contractor Management: What Is It?

Many industries often rely upon contractors for very specialized skills and, sometimes, to accomplish particularly hazardous tasks – often during periods of intense activity, such as maintenance turnarounds.

Such considerations, coupled with the potential lack of familiarity that contractor personnel may have with facility hazards and operations, pose unique challenges for the safe utilization of contract services. A Contractor management system is a set of controls and procedures to ensure that contracted services support both safe facility operations and the company’s process safety and personal safety performance goals. This element addresses the selection, acquisition, use, and monitoring of such contracted services. Contractor management does not address the procurement of goods and supplies or offsite equipment fabrication functions that are covered by the asset integrity quality assurance function. While the most significant contractor safety challenges typically involve workers located closest to process hazards or involved in high-risk occupations, such as construction work, the safety needs of contractors providing simpler and more routine tasks, such as janitorial or groundskeeping services, must also be addressed in the contractor management program.

Why Is It Important?

Companies are increasingly leveraging internal resources by contracting for a diverse range of services, including design and construction, maintenance, inspection and testing, and staff augmentation. In doing so, a company can achieve goals such as

(1) accessing specialized expertise that is not continuously or routinely required,

(2) supplementing limited company resources during periods of unusual demand, and

(3) providing staffing increases without the overhead costs of direct-hire employees. However, using contractors involves an outside organization that is within the company’s risk control activities.

The use of contractors can place personnel who are unfamiliar with the facility’s hazards and protective systems into locations where they could be affected by process hazards. Conversely, as a result of their work activities, the contractors may expose facility personnel to new hazards, such as unique chemicals hazards or x-ray sources. Also, their activities onsite may unintentionally defeat or bypass facility safety controls. Thus, companies must recognize and address new challenges associated with using contractors. For example, training and oversight requirements will be different from those for direct-hire employees. Thus, companies need to carefully select contractors and apply prudent controls to manage their services (Ref. 13.1). Only by working together can companies and contractors provide a safe workplace that protects the workforce, the community, and the environment, as well as the welfare and interests of the company .

Where/When Is It Done?

Contractor management begins well before the issuance of any service contract. Systems must be established for qualifying candidate firms based upon not only their technical capabilities, but also their safety programs and safety records. Orientation and training of contractor personnel must be accomplished before they begin work. Responsibilities for this training must be defined, with some training often provided by the contract employer and some by the contracting company. The boundaries of authority and responsibilities must be clearly set for any contractor that works at the facility. Periodic monitoring of contractor safety performance and auditing of contractor management systems is required. At the end of each contract period, retrospective evaluation of a contractor’s safety performance should help determine whether the particular contractor is retained or considered for future work.

Why Every Business Needs an OHS Software

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One of the challenges that face every business nowadays is the necessity of maintaining a safe and risk-managed workplace, and that’s why it became necessary that businesses have an Occupational Health and Safety or OHS Management System in place.

An OHS management system is designed to help monitor and manage health and safety within the workplace. The safety of your employees can be protected with these systems, and they ensure that all your employees, contractors and visitors are safely working in their stipulated places, through eradicating any unsafe practices that are undertaken accidentally in your business place, and keeping safety practices up-to-date.

Without an OHS software it would be difficult to ensure the safety of your employees, and to maintain any efforts towards stopping unsafe work practices. There are chances of lapse in safe guarding your business place against possible law suits in case an employee gets injured on his own. In event that your business still does not have an OHS Management Software in place then you can engage the expertise of the best Safety Management Consulting company for your workplace and experience the difference. They will suggest the right type of management system that is exact for your business.

OHS Management Systems can help business owners build a safe and healthy working environment for their staff. With OHS system in place you will have the necessary tools to monitor, manage and reduce the amount of injuries and accidents within your company. When working with peace of mind after taking all the safety considerations into account you can focus more on the goal of working towards reaching pinnacles of your industry. Working with an injury free workplace you can set your management systems in a manner that they are able to help you achieve this goal and aid in business improvement.

Business management software can identify the workplace hazards as the specialist from a safety management consulting company helps point out any risks or hazards in your workplace. With their immense experience in this area they are skilled and able to identify any risks or hazards that you may have missed or not identified in time.

Keeping in view integrated business solutions everybody within your company needs to be actively involved in the implementation of safer work place practices. It is the contribution of experts, managers, supervisors and employees that make safer workplaces possible. Reviewing the OHS Software once it is in place is important for ensuring relevant changes from time to time.

Why Risk Management Matters

It’s the obvious question, and the answer is usually simpler than what you might think: Better risk management leads to better business performance. And  the business benefits of embracing risk management are stronger now than ever before.

Risk is a tricky thing. Without it, growth is impossible. But it’s not just about taking more risks, it’s about understanding and controlling the risks you take.

The threats that face business risks take many forms, including strategic, operational, financial and compliance risks. Individually or combined, these can jeopardize a company’s financial and operational stability.

First, what is risk management system? and why do I need it?

A risk management system is a methodical approach to identifying and managing the risks that businesses face every day, and an effective way to ensure you are providing a safe environment, protecting the assets, people and reputation of your company

Under workplace health and safety legislations and the common law duty of care, employers are legally required to manage the risks associated with the running of their business. This entails taking adequate steps to minimize reasonably foreseeable risks.

Risk Identification and Evaluation

During the course of their day to day activities, all businesses are exposed to varying degrees of risk. These exposures will vary greatly for each business in terms of scope and severity. The process of risk management is to assist the organisation to balance their risk exposures against business opportunities to achieve corporate plans and objectives.

A total analysis of the risk facing any business is enormous, ranging from such things as incorrect marketing or customer segment decisions, poor financing arrangements, employee disputes and the effects of a major fire or catastrophe.

Some risk exposures can be considered to be fundamental to the overall strategic planning and management control of the business and are generally under the control of the board or senior executives. Performance and ongoing viability of the business can be adversely affected by poor decision making or planning relating to a wide range of these risks.

Other risks can more readily be managed (or partly managed) at an operational level to eliminate or reduce the threat to the business. A final category of risks may be those over which the management and employees of the business have little control, or capability of reducing to any significant degree.

Using the process of Risk Management encapsulated in AS/NZS 4360, an organisation can create a framework to assist in the identification and analysis of the risks specific to its particular business activities.

Avoiding, Reducing and Controlling Risk Exposures

The next step in the risk management process is the balancing of key corporate objectives (like profitability and expense control), against safety, and the avoidance, reduction and control of losses.

The conventional wisdom says that putting an emphasis on risk management slows your business, but based on recent studies the contrary is true: Companies that put a premium on risk management are seeing better growth and increased profit margins.

Companies that put a premium on risk management can cope with ever-increasing business risks while seizing opportunities that present themselves.

 

How Safety Management Affects Profitability

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One of the most factors that keep businesses in the black in expense control. When an employee gets injured on the job, the company or business ends up paying considerable amount of money for unplanned expenses, which can in some cases lead to affecting its ability to perform and survive.  A recent Canadian study found that small businesses with high injury rates fail sooner than those with better safety records. That’s why a safety management system is usually conidered an effective cost-control tool to keep risk to a minimum, and maintain profitability.

Increased Insurance Premiums

Safety regulations in most states make workers compensation insurance mandatory for employers with at least one employee who’s not the owner. And even though such insurance covers the employees medical expenses, rehabilitation and a portion of wages lost due to any work-related accidents, businesses will have to buy it with premiums tied to their safety history, i.e. the more workplace injuries, the higher the premiums. They also often pay for uncovered medical expenses out of pocket. Safe Work Australia estimates that direct workers’ compensation expenses costs AU employers nearly $6.5 billion each year.

Indirect Costs of Workplace Accidents

Direct safety costs such as workers’ compensation and medical bills pale when compared to the indirect costs a business pays after an on-the-job accident. According to the American Society of Safety Engineers, businesses pay more than $2 in indirect expenses for every dollar paid for direct costs. The biggest category of indirect expense relates to payroll. A workplace accident may mean hiring and training a replacement, paying overtime and paying any wages and benefits workers’ compensation doesn’t cover. Increased payroll costs can add up quickly: The U.S. Bureau of Labor Statistics reports absences last a median of eight days. Management and staff time diverted to accident-related administration tasks also adds to indirect compensation expense.

The Cost of Downtime

And if direct and indirect costs of workplace injuries are not enough, businesses also have to account for the cost of downtime due to workplace accidents. When an accident happens, work has to be stopped immediately, the accident must be investigated, corrections need to be made immediately, and any damaged property or equipment must be repaired and supplies or raw materials replaced before work can resume. The resulting drop in productivity can cause delivery and scheduling delays that damage customer relations or sales — additional indirect costs that impact profits. Worker distraction may hinder your team’s ability to achieve normal production levels quickly, as can accommodating the injured worker upon return.

The Indirect Benefits Of a Safe Workplace

Safety management offers profitability-guarding benefits. Don O’Neal, safety manager at a 116-employee business in Florida, told the Jacksonville Business Journal in a 2010 article that his safety program raised employee morale and made them more productive. Clients may require evidence of safety training and workers’ compensation coverage in their contracts. According to OSHA, businesses with the reputation for being safety-conscious business earn “better places to work” ratings that make attracting job candidates easier and reduce recruitment costs. Finally, putting safety first enhances a business’s standing in the community and generates positive publicity, factors that contribute to customer confidence.