5 Benefits of an Enterprise Risk Management Solution

In most cases, companies only think of using an Enterprise Risk Management (ERM) software for managing their organisation’s Health and Safety whenever an audit is coming up and they want a fast way to get on track and ensure they are still compliant with international standards.

However, this shouldn’t be so. Enterprise Risk Management (ERM) simply means measures taken by key stakeholders to make sure the conditions and procedures of operation of an establishment are ultimately and strategically protected to the highest degree possible.

Risk protection tradition has evolved greatly over the years. Taking data-reliant organisations as a case study, various solutions have been proffered to the menace of hacking. Latest solutions involve the use of configured software in ensuring the safety of acquired data.

Benefits of Risk Management Solutions

ERM solutions have redefined the way risks are managed in organisations around the world, bringing along unique benefits. It has noticeable effects in terms of quality and quantity. Let’s check out five unique benefits that come with the usage of ERM solutions.

1. Increase Urgency assigned to Risk Management Culture: most of the times, the majority of staffs within the organisation are aware of the basic risks involved but no serious measure is taken to beef up security. Adopting the ERM solution gets them talking about risks and how they can move further above the awareness level to the mitigation level.

This automatically promotes safety and risk management culture across the organisation. Getting the entire staffs talking does not only provide additional information to top officials pertaining to risk awareness. It also gives them further insight as to tackling them and better decisions are made by the set committee.

2. Access to A Well-Structured Risk Identification Process: risk identification can only be helpful when it comes with all the right information needed to take decisive action.  ERM solutions do beyond identifying risks. It is structured to perform analysis that accesses the level of seriousness of identified risks. This help ERM managers improve their focus on risk mitigation. Additionally, it helps to identify emerging risk factors and other important variables such as level of seriousness, and many more important factors.

ERM solutions also output its reports in a brief, timely and improved format. Making it possible and easy to perform a synergy with other relevant risk data. These data, which may be from external sources are used to obtain an aggregate result for a better decision-making process.

3. Increased Sensitization and In-Depth Outlook on Risk: ERM solutions are incredible guides in ensuring safety in organisational activities. They are quick to point out little changes in an organisation’s activities that have risk inducing potentials.

Beyond modification, acceptance, and avoidance which are the traditional elements of risk management, ERM solutions also help in creating and expanding industry for experts in performing top notch examination of risk practices.

4. Judicious Utilization of Available Resources: manual risk management can be time-consuming. This has been confirmed by organisations yet to adopt ERM solutions. On the other hand, adopting risk management solutions doesn’t totally relieve your organisation of risk management responsibilities. It still requires monitoring and crucial decision making on the part of designated stakeholders.

However, ERM solutions bring about great relief. Time spent in manual risk management is then diverted to other productive sectors of the organisation, thereby reducing redundancy and increasing productivity.

5. Ensure Highly Coordinated Regulation and Compliance Level ERM data are used to identify and monitor set and regulated controls in an organisation. Also, mitigation procedures are monitored to ensure nothing disrupts compliance. There have been several reports of data reliant organisations requesting, testing and using data generated via ERM solutions. This is sole as a result of the high level of coordination and compliance of ERM solutions.

Adopt Our ERM Solutions Today

You can never go wrong by protecting your organisation. Adopt our Enterprise Risk Management (ERM) solutions today and be sure of fewer worries concerning organisational safety. Our ever-dynamic software has been helping businesses and other organisations to manage and improve safety and compliance for over a decade. Our Software possesses awesome functions, coupled with a simple and flexible interface.

You can begin by signing up for a free trial and see how our software can make your organisation a safer one.

 

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4 Risk Management Checklists Every Safety Manager Should Know

Risk management is a powerful instrument used for distinguishing and limiting hazards that exist in the working environment. Once recognised, a portion of these hazards can be eliminated. Others can be controlled somewhat while giving you expanded command over risks that post dangers to your employees.

When managed appropriately, this checklist can turn into a rule for your organisation as it achieves compliance; decreases work environment stress and hazards and expand in efficiency and productivity. Contingent upon your industry and type of business, you may need to make changes to these things. With that said, let us start with the checklists.

 

Checklists#1 – Identification of Risks

The initial phase of risk management is to recognise the hazards that should be controlled. This ought to incorporate the circumstances, areas and physical things that could make hurt individuals – whether those individuals are your clients, your specialists or guests.

Common risks that might be uncovered include items in the physical work environment, equipment, chemicals, or other structural issues. Do not limit your search to the questions you can physically see, however. Things like excessive noise, fumes and high or low temperatures can also create unsafe working conditions.

One of the best and simplest ways to recognise hazards is to ask the majority of your employees. They work intimately with hardware and apparatus that you may never contact. They know a lot about their environment, and their info is vital concerning risk management.

 

Checklists#2 – Assessing Identified Risks

When you have identified potential hazards, it is an excellent opportunity to assess every one of them. You will have to decide how serious each risk is and whether you have any current control estimates that could be compelling in limiting or eliminating it.

With this data, you can figure out what move you should make to control the risk. Now you can likewise organise the work in front of you. Which risks request the is most urgent? Which ones can hold up a while?

 

Checklists#3 – Taking Control of the Risks

Keep in mind that the best control measures are those that eliminate risks. If it is not conceivable to dispose of them, limit them to its barest conceivable state. Be imaginative as you look for methods by which to eliminate or reduce risks. Now and again, a single control may not be as viable as a mix of various restrictions that cooperate to limit the risk. As you survey your list, you will see that a few risks are quite easy to control and therefore can be managed immediately. Others may take time with arranging, conceptualising and strategising.

Remember that risk management is anything but a one-time assignment. Employees change, your working environment changes and you get new gear and innovation over the long haul. Along these lines, risk management ought to be a continuous venture. Numerous Australian organisations find that they can keep up successful risk management by booking appraisals all the time to refresh any new risks and assess their advancement.

 

Checklists#4 – Tackling Risk Management

With your endeavours devoured continuously to the management of your business, risk management can appear to be a weight that is more inconvenience than its worth. In all actuality, nonetheless, that lessening your risk will spare you time and cash later on when you don’t need to manage mishaps and mischief to your profitable employees.

If the possibility of risk management feels difficult, get some assistance. Our OHS programming makes risk management considerably less demanding, providing you with thorough risk management checklists, compliance-prepared standard procedures and easy correspondence between colleagues. There is no compelling reason to reinvent the wheel. You can utilise our checklist to deal with your risk, wellbeing and security commitments.

Get a free trial of our software to see the benefits firsthand, and get in touch with us if you have any further inquiries.

4 Big Reasons Why Manufacturing Companies Should Enhance Operational Risk Management

There are distinctive sorts of risks, even though many are intertwined: financial risks, reputational risks, operational risks, store network or outsider risks, consistency/ legal risks, and others. Numerous individuals see operational risks through the perspective of security management: improving specialist and process wellbeing prompts more gainful tasks while the alleviation of operational risks – made by inappropriately maintained (or malfunctioning) gear or by the nearness of work environment dangers – diminishes injuries and ailments.

For manufacturers, it is essential to see the link amongst security and operational risk management. In any case, the method of reasoning for improving operational risk management goes past well-being. There are a few compelling motivations to enhance operational risk management. We share four of the essential ones in this post, which are supported by Aberdeen survey results.

1) Accomplish Financial Objectives

Numerous manufacturers see the connection between mitigating operational risks and improving profitability. In any case, Best-in-Class associations have the foreknowledge to go above and beyond and furthermore observe the link with financial execution. According to an Aberdeen overview, 52% of respondents said they have to decrease the effect of operational risks on business objectives. Furthermore, 42% of Best-in-Class organisations adjust operational information to financial information to comprehend the economic impact of unfavourable occasions.

2) Increase and Enhance Coordinated effort

The fruitful accomplishment of financial objectives speaks to a hard, quantifiable advantage. Implementing an operational risk management framework likewise brings its advantages, for example, increased participation and coordinated effort. According to a similar Aberdeen review, 47% of respondents recognise viable cooperation crosswise over practical divisions as a necessity to execute an operational risk management system, which prompts the joint management of risks. The execution of a functional risk management system gives the incentive and impetus to associations to likewise enhance cross-utilitarian joint effort.

3) Institutionalize Risk Appraisal

Best-in-Class manufacturing associations comprehend that the fruitful moderation of operational risks improves the probability that corporate targets will be met. To effectively relieve operational risks, similar strategies, techniques, and risk evaluation approach must be connected to the organisation. By improving operational risk management, the Best-in-Class accomplish more noteworthy institutionalisation in risk appraisals and somewhere else. 54% of Best-in-Class manufacturers have traditional risk evaluation forms over the undertaking. That figure is 36% for every other producer, meaning the Best-in-Class are 50% more inclined to institutionalise risk evaluation forms.

4) Manufacture a Culture of Risk Mindfulness

In the Aberdeen overview, 41% of manufacturers said they have to construct a risk mindfulness culture all through the association. By improving operational risk management, organisations establish the following frameworks that prompt risk mindfulness:

  1. Increased and enhanced the joint effort
  2. The institutionalisation of risk evaluations

Through a culture of risk mindfulness, manufacturers set up more prominence into operational risks and control measures, and integrate a risk mindset in day-to-day assignments, in this way additionally reducing operational risks and their effects on corporate and financial goals.

Beakon software can enable you to have a bird’s eye view of your entire safety management program. Take advantage of a free trial today and start enjoying the benefits of using software to fast track your incident reporting, injury management, issuing permits to work et al.

Top Reasons Why You Need To Link Incident and Risk Management Together

It does not make a difference what industry your organisation operates. There are a few advantages of connecting an incident database to a risk register. In this post, we feature the benefit of combining the two incidents and risks and the experiences that such an association can bring.

Incident Management and Risk Management

Successful companies utilise incident management software to catch and report incidents and unfriendly occasions. Incidents include near misses, and also, mishaps that brought about fatalities, wounds, ailments or property harm. A few companies additionally empower their workers to report incidents remotely and in the field through a mobile application.

Another reasonable step many successful companies leverage is the use of risk management software to enhance the way toward recognising, surveying, relieving and observing all risks all through the venture. Risk programming is more powerful than spreadsheets to keep up and refresh a risk register that incorporates all risks and controls.

Advantages of Connecting Both Risk and Incident Management Together

While there are individual benefits related to combining both incident and risk management software, yet there are significantly more prominent advantages when both of them are connected. More specifically, four kinds of significant insights can be accessed through this connection. These are:

1) Incidents help to recognise already obscure risks. Each time an incident happens, you should check whether a comparing risk was already distinguished. If not, at that point the new risk ought to be investigated and assessed. If there are numerous comparative incidents, it might demonstrate a pattern is indicating a noteworthy risk.

2) Incidents (in)validate the probability of risk. As a significant aspect of a risk assessment, you have decided the likelihood of an unfriendly occasion. Since an incident is a risk that has emerged, the number of incidents can enable you to check if the possibility you have built up is as yet substantial, or if it should be refreshed.

3) Incidents (in)validate the seriousness of risk. As a feature of a risk assessment, you have additionally decided the severity of the effects of an antagonistic situation. The results of an incident compared to a particular risk can enable you to confirm if the seriousness level you have built up is even substantial, or if it should be refreshed on the off chance that it was overestimated or disparaged.

4) Incidents help to assess the adequacy of controls. By a wide margin, the most critical advantage of connecting incidents and risks is the way it can determine the viability of controls. On the off chance that there are numerous antagonistic occasions of a similar sort related to a particular risk, it might show that the control isn’t compelling. The invert is likewise valid. For instance, if 3-5 unfavourable occasions were ordinary every year for a particular risk, yet “just” one happened, it might show that the control is more viable than initially thought.

The four things above ought not to occur in separation. For instance, numbers #2, #3 and #4 will cooperate. The adequacy of control will be assessed by considering any progressions to the probability and seriousness of the effects of an unfriendly occasion. Changes to the remaining risk may likewise evaluate the adequacy of the control.

Conclusion

One major takeaway from this article is the need to create a way for both incidents and risks to be fully integrated into one robust EHS Management software that works seamlessly together. This guarantees a consistent trade of information between various applications and capacities, including information on incidents, risks, and controls.

Luckily, Beakon’s all-in-one software has this capability. You can take advantage of a free trial today. Try our software free, and we are sure the ease of use and fantastic interface will make keep using it for your safety management needs.

 

6 Stages to Empower an Operational Risk Management Program

Manufacturers are known to have established different safety measures that have demonstrated great accomplishment in lessening work-related incidents over the years. In any case, reducing manufacturing risks is not enough to mitigate operational dangers. This article explores six crucial stages to empower a thorough, institutionalised functional risk management program:

Stage 1: Build up Possibility Arrangements and Heightening Methodology

Risk management is a continuous procedure for the duration of the life of a producer. As a piece of recording and forestalling risk, decreasing the likelihood of unfriendly occasions requires setting an alternate course of action that is built up through organisation approach and incorporates a progression of activities or acceleration strategies if any incident happens.

Stage 2: Institutionalize Risk Evaluation over the Undertaking

Manufacturers must characterise their penchant for risk in a way that records for workforce security, resource management, ecological effect, and business suggestions. To some degree, risk evaluation is emotional given the individual perspectives of an occasion. Setting up a strategy that expels this inclination will enable the whole association to comprehend the seriousness of risk levels.

Stage 3: Adjust Innovation That Accommodates Your Company Culture and Procedures

Add arrangements that are anything but trying to utilise and incorporate with your present procedure. Remember that any new method will require preparing, which ought to be viewed as an essential piece of the combination. Utilize reproduction to decrease blunders and empower usefulness that fits with the current procedure.

Stage 4: Adjust Operational Information to Financial Information

Comprehend the monetary effects of unfriendly occasions by adjusting operational and money related information. What matters for a manufacturing company is to stay productive, which implies understanding the financial impact of different situations. With this comprehension of the operational connect to money related effect, makers can get ready and ideally keep the economic harm of an unfriendly occasion.

Stage 5: Completely Focus on the Procedure

This progression is vital if you need your methodology to be a long haul. A fruitful usage of a viable operational risk management program requires buy-in from top management directly down to partners.

Stage 6: Keep Everybody In agreement

Keeping everybody in your association on top of it is critical. Correspondence crosswise over Research and development gatherings, outsider sellers, and assembling will guarantee achievement.

Conclusion

You can use Beakon’s safety management software to manage every aspect of your organisation safety program. Take advantage of a free trial to get started today, and start enjoying the benefits of using software to manage your company’s safety management programs.

Risk Register Systems: Everything Project Managers Need To Know

Project managers are accustomed to facing risks whenever they undertake a new project. It is their job, however, to find ways to mitigate these risks. For project managers to tackle these situations effectively, they use risk management processes and frameworks. One of the most essential components of a risk management framework is the risk register.

What is a Risk Register System?

A risk register system also referred to as a risk log, can be used to track and deal with issues as they arise in real-time. Project managers create risk register systems at the early stage of a new project to help them identify, assess, and manage risks down to an acceptable level through a review and update process.

How does a Risk Register System work?

As we have described above, the risk register is a logbook used to identify, access and manage risks. It is a part of several risk assessment tools, and the way it works is not complicated. Its purpose is to record every detail of all the risks associated with a project along with the risks identified, the analysis of those risks and proposed plans to mitigate those risks.

Project managers can view the risk management database as a management tool for monitoring the risky aspects of any project within the risk management framework. The project manager is also responsible for ensuring that the risk register is updated as often as necessary.

List of Risk Management Processes

You can expect several risk management processes in a risk register. As a matter of fact, the risks that are recorded in the risk log are the driving factor for these risk management processes as specified in the PMBOK Guide.

Perform Qualitative Risk Analysis Process

This is the process of prioritising risks for additional analysis or action. This is done by estimating the probability of the risk occurring and its likely impact. One of the benefits of this process is that it helps project managers reduce the level of uncertainty in their projects and only focus on high-priority risks.

Perform Quantitative Risk Analysis Process

This process, on the other hand, focuses on analysing the effect of the risks identified in the objectives of your project. While there are several benefits to this process, the most important one is that it produces quantitative risk information that helps in making better decisions. This enables project managers to reduce project uncertainty in their projects.

Plan Risk Response Process

This is the process of enhancing opportunities while reducing threats to project objectives. One of the benefits of this process is that it tackles risks based on priority, thus inserting resources and activities into the overall budget.

Monitor and Control Risk Process

This is the process of executing risk response plans, tracking the risks identified, monitoring all residual risks, and determining new risks. Also, this process helps with evaluating the risk management’s effectiveness across the entire project.

Conclusion

One of the best things project managers can look forward to when it comes to managing their project risks is the ability to use technology. First, technology can be used for the entire risk management process. Beakon’s risk management software, risk assessment tools and risk register system are all part of an all-in-one system that helps top companies remain safe and efficient. Grab a free trial today.

 

 

 

 

 

 

 

 

How to Develop a Risk Management Plan

Developing an effective Risk Management Plan can help keep small issues from developing into emergencies. Different types of Risk Management Plans can deal with calculating the probability of an event, and how that event might impact you, what the risks are with certain ventures and how to mitigate the problems associated with those risks. Having a plan may help you deal with adverse situations when they arise and, hopefully, head them off before they arise.

1- Understand how Risk Management works. Risk is the effect (positive or negative) of an event or series of events that take place in one or several locations. It is computed from the probability of the event becoming an issue and the impact it would have (See Risk = Probability X Impact). Various factors should be identified in order to analyze risk, including:

  • Event: What could happen?
  • Probability: How likely is it to happen?
  • Impact: How bad will it be if it happens?
  • Mitigation: How can you reduce the Probability (and by how much)?
  • Contingency: How can you reduce the Impact (and by how much)?
  • Reduction = Mitigation X Contingency
  • Exposure = Risk – Reduction
    • After you identify the above, the result will be what’s called Exposure. This is the amount of risk you simply can’t avoid. Exposure may also be referred to as Threat, Liability or Severity, but they pretty much mean the same thing. It will be used to help determine if the planned activity should take place.
    • This is often a simple cost vs. benefits formula. You might use these elements to determine if the risk of implementing the change is higher or lower than the risk of not implementing the change.
  • Assumed Risk. If you decide to proceed (sometimes there is no choice, e.g. federally mandated changes) then your Exposure becomes what is known as Assumed Risk. In some environments, Assumed Risk is reduced to a dollar value which is then used to calculate the profitability of the end product.

 

2- Define your project. In this article, let’s pretend you are responsible for a computer system that provides important (but not life-critical) information to some large population. The main computer on which this system resides is old and needs to be replaced. Your task is to develop a Risk Management Plan for the migration. This will be a simplified model where Risk and Impact are listed as High, Medium or Low (that is very common especially in Project Management).

 3- Get input from others. Brainstorm on risks. Get several people together that are familiar with the project and ask for input on what could happen, how to help prevent it, and what to do if it does happen. Take a lot of notes! You will use the output of this very important session several times during the following steps. Try to keep an open mind about ideas. “Out of the box” thinking is good, but do keep control of the session. It needs to stay focused and on target.
4- Identify the consequences of each risk. From your brainstorming session, you gathered information about what would happen if risks materialized. Associate each risk with the consequences arrived at during that session. Be as specific as possible with each one. “Project Delay” is not as desirable as “Project will be delayed by 13 days.” If there is a dollar value, list it; just saying “Over Budget” is too general.
5- Eliminate irrelevant issues. If you’re moving, for example, a car dealership’s computer system, then threats such as nuclear war, plague pandemic or killer asteroids are pretty much things that will disrupt the project. There’s nothing you can do to plan for them or to lessen the impact. You might keep them in mind, but don’t put that kind of thing on your risk plan.

6- List all identified risk elements. You don’t need to put them in any order just yet. Just list them one-by-one.
7- Assign probability. For each risk element on your list, determine if the likelihood of it actually materializing is High, Medium or Low. If you absolutely have to use numbers, then figure Probability on a scale from 0.00 to 1.00. 0.01 to 0.33 = Low, 0.34 to 0.66 = Medium, 0.67 to 1.00 = High.
Note: If the probability of an event occurring is zero, then it will be removed from consideration. There’s no reason to consider things that simply cannot happen (enraged T-Rex eats the computer).
8- Assign impact. In general, assign Impact as High, Medium or Low based on some pre-established guidelines. If you absolutely have to use numbers, then figure Impact on a scale from 0.00 to 1.00 as follows: 0.01 to 0.33 = Low, 0.34 – 066 = Medium, 0.67 – 1.00 = High.
Note: If the impact of an event is zero, it should not be listed. There’s no reason to consider things that are irrelevant, regardless of the probability (my dog ate dinner).
9- Determine risk for the element. Often, a table is used for this. If you have used the Low, Medium and High values for Probability and Impact, the top table is most useful. If you have used numeric values, you will need to consider a bit more complex rating system similar to the second table here. It is important to note that there is no universal formula for combining Probability and Impact; that will vary between people and projects. This is only an example (albeit a real-life one):
Be flexible in analysis. Sometimes it may be appropriate to switch back and forth between the L-M-H designations and numeric designations. You might use a table similar to the one below.
10- Rank the risks. List all the elements you have identified from the highest risk to the lowest risk.
11-  Compute the total risk: Here is where numbers will help you. In Table 6, you have 7 risks assigned as H, H, M, M, M, L, and L. This can translate to 0.8, 0.8, 0.5, 0.5, 0.5, 0.2 and 0.2, from Table 5. The average of the total risk is then 0.5 and this translates to Medium.
12- Develop mitigation strategies. Mitigation is designed to reduce the probability that a risk will materialize. Normally you will only do this for High and Medium elements. You might want to mitigate low risk items, but certainly address the other ones first. For example, if one of your risk elements is that there could be a delay in delivery of critical parts, you might mitigate the risk by ordering early in the project.
13- Develop contingency plans. Contingency is designed to reduce the impact if a risk does materialize. Again, you will usually only develop contingencies for High and Medium elements. For example, if the critical parts you need do not arrive on time, you might have to use old, existing parts while you’re waiting for the new ones.
14- Analyze the effectiveness of strategies. How much have you reduced the Probability and Impact? Evaluate your Contingency and Mitigation strategies and reassign Effective Ratings to your risks.
15- Compute your effective risk. Now your 7 risks are M, M, M, L, L, L and L, which translate to 0.5, 0.5, 0.5, 0.2, 0.2, 0.2 and 0.2. This gives an average risk of 0.329. Looking at Table 5, we see that the overall risk is now categorized as Low. Originally the Risk was Medium (0.5). After management strategies have been added, your Exposure is Low (0.329). That means you have achieved a 34.2% reduction in Risk through Mitigation and Contingency. Not bad!
16Monitor your risks. Now that you know what your risks are, you need to determine how you’ll know if they materialize so you’ll know when and if you should put your contingencies in place. This is done by identifying Risk Cues. Do this for each one of your High and Medium risk elements. Then, as your project progresses, you will be able to determine if a risk element has become an issue. If you don’t know these cues, it is very possible a risk could silently materialize and affect the project, even if you have good contingencies in place.

The Quest for Global Risk Agility

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Man-made risks, such as cyberrisk, physical security threats and climate change—are the driving forces in the global threat landscape. Unlike natural risk, which remains a central preoccupation, man-made risks have agency. Simply put, a tornado does not pre-plan where and who it will strike. A cyberattack, by contrast, is generally not a random event. While large organizations can often shield themselves from the financial consequences of many risks, the ensuing reputational harm can irrecoverably erode market share and stakeholder trust. Small- to mid-sized enterprises confront these challenges as an existential threat.

The quest for global risk agility is principally a management framework aimed at changing the way organizations and senior leaders think about risk. Rather than making risk an object of “passive control” and something to be feared, agile decision makers make risk an object to be understood—with a healthy dose of respect—and properly harnessed. There is a risk in doing nothing at all in these turbulent times. Organizations, large or small, can no longer afford to remain on the sidelines.

Organizations tend to be far too passive vis-à-vis their approach to risk management. Risk does not wait for a board to have a quorum among its members before it strikes. Risk also does not recognize the annual planning, strategy or budgetary cycles that are the drumbeat of large enterprises. Too few of these organizations—particularly publicly-listed firms—are marching to the drumbeat and, therefore the short-termism, of the stock market. In the era of man-made risks, decisions need to be framed around longevity and optimization, as opposed to short-term performance and maximization. It is only through this that organizational resilience and a spirit of collective survival will take hold.

The best place to start is to create greater awareness of man-made risk in the context of global risk analysis. Too often, boards and senior decision-makers do not know what questions they should ask of each other, or necessarily where to obtain the right answers. This reality is confounded by the individual silos or domains over which senior leaders reign, largely in indifference to and with independence from their colleagues in the C-suite. The first step is to acknowledge that they may not have all the answers, particularly within the context of long-range planning. It is every global firm’s duty and obligation to develop their own “foreign policy” with respect to operating in international markets. Of course, this also applies to operating domestically, where a rare breed of organization puts its value systems front and center in all decisions, large or small.

Businesses will never be outside the reach of controllable and uncontrollable risk—all they can do is attempt to manage them in a reasonable and effective fashion. In the era of man-made risk, which often clashes with natural risk, many firms need to greatly strengthen their organizational resilience and risk management procedures, or to consider getting into another line of business in another location. Some prime examples are those firms with high profiles and/or a lot of money (that may attract the attention of cybercriminals), those that operate in strategic sectors (that may attract the attention of nationalistic governments), and those located in flood-prone areas or that function in areas of the world particularly prone to terrorism. The intersection between man-made and natural risk will only grow with time, with increasingly profound potential implications.

If 2016 was the year of cyberrisk maturity in that there is not an organization in advanced markets that is not sensitized to their exposure, 2017 will be the year of decision opacity. In other words, decision-makers from large and small enterprises, and across sectors, will be confounded by a world that is increasingly difficult to read and, therefore, to make long-range plans for inventory, investments, hiring and market expansion. Risk can be measured, but uncertainty cannot: Uncertainty creates bank runs, erodes consumer and investor confidence and trust in counterparties and institutions. 2017 will mark a year of intense uncertainty. Those firms already seeking global risk agility—and actively devoting resources to and making decisions consistent with that objective—stand the best chance of actually achieving organizational resilience in the face of such uncertainty.

This post was originally published on the Risk Management Magazine

Applying risk management tools

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In the environmental, health and safety industry, emphasis is placed on reducing job-related incidents and increasing the level of workplace safety and compliance. Anything that jeopardizes those priorities needs to be contained and prevented from happening again. Risk management tools provide a systematic method for handling such events with consistency and objectivity.

Using a risk matrix – a tool that quantifies hazards based on severity and frequency – is the first step in that systematic process. A risk matrix defines numerical scales for the frequency and severity of possible incidents to determine how large of a risk that event is. For example, if something has high severity and high frequency, it is considered high risk. If something is low in both of those areas, it is considered low risk. This information helps EHS professionals make decisions across a number of areas.

Applying risk management to EHS organizations

Although the risks will be different for every organization, some applications of risk management are beneficial to all EHS organizations.

Incident management: EHS systems need to track any adverse incidents such as injuries, illnesses and chemical spills, among others. Documenting incidents and collecting data helps you contain the effects, get back into compliance and ensure the incidents do not happen again. Using a risk management tool such as a risk matrix helps prioritize these critical issues. It provides a systematic process to follow, which makes it easier to make decisions about handling the situation.

Job safety analysis: Risk management provides a benchmark for JSA, breaking down the individual pieces of a job description and analyzing them with the same methods as an adverse event. Once potential hazards are revealed, the organization can take steps to prevent or decrease the risk through protective equipment or safety regulations specific to the job. Knowing what incidents could possibly occur leads to prevention, which decreases the chance of the incident actually happening.

Corrective action: EHS systems can also apply risk to the corrective action process to determine if a corrective action was effective. The risk values of an incident after the corrective action measures the residual risk to see if the corrective action worked. This can be repeated as many times as necessary, until the risk has been reduced to an acceptable level.

Enterprise reporting: Having an automated EHS system that collects data is not enough. You need a tool that reports the data in a comprehensive manner, determining general trends and overall impacts. Risk management tools give executives fuel to make informed decisions and changes with support from data. They can connect the root causes of incidents that happen in different departments and look at the EHS enterprise as a whole.

There’s more

Risk management tools are invaluable for EHS professionals in other areas: emissions tracking, energy management, Safety Data Sheets, aspects, objectives and targets, and crisis management – just to name a few. Incorporating risk management tools to all of your EHS operations will help you make informed decisions and get on a path of constant improvement.

What is Risk Management? And Why Should you Care?

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Risk management is the process of identifying, assessing and controlling threats to an organization’s capital and earnings. These threats, or risks, could stem from a wide variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters. IT security threats and data-related risks, and the risk management strategies to alleviate them, have become a top priority for digitized companies. As a result, a risk management plan increasingly includes companies’ processes for identifying and controlling threats to its digital assets, including proprietary corporate data, a customer’s personally identifiable information and intellectual property.

Risk management standards

Since the early 2000s, several industry and government bodies have expanded regulatory compliance rules that scrutinize companies’ risk management plans, policies and procedures. In an increasing number of industries, boards of directors are required to review and report on the adequacy of enterprise risk management processes. As a result, risk analysis, internal audits and other means of risk assessment have become major components of business strategy.

Risk management standards have been developed by several organizations, including the National Institute of Standards and Technology and the ISO. These standards are designed to help organizations identify specific threats, assess unique vulnerabilities to determine their risk, identify ways to reduce these risks and then implement risk reduction efforts according to organizational strategy.

The ISO 31000 principles, for example, provide frameworks for risk management process improvements that can be used by companies, regardless of the organization’s size or target sector. The ISO 31000 is designed to “increase the likelihood of achieving objectives, improve the identification of opportunities and threats, and effectively allocate and use resources for risk treatment,” according to the ISO website.  Although ISO 31000 cannot be used for certification purposes, it can help provide guidance for internal or external risk audit, and it allows organizations to compare their risk management practices with the internationally recognized benchmarks.

The ISO recommended the following target areas, or principles, should be part of the overall risk management process:

  • The process should create value for the organization.
  • It should be an integral part of the overall organizational process.
  • It should factor into the company’s overall decision-making process.
  • It must explicitly address any uncertainty.
  • It should be systematic and structured.
  • It should be based on the best available information.
  • It should be tailored to the project.
  • It must take into account human factors, including potential errors.
  • It should be transparent and all-inclusive.
  • It should be adaptable to change.
  • It should be continuously monitored and improved upon.

The ISO standards and others like it have been developed worldwide to help organizations systematically implement risk management best practices. The ultimate goal for these standards is to establish common frameworks and processes to effectively implement risk management strategies.

These standards are often recognized by international regulatory bodies, or by target industry groups. They are also regularly supplemented and updated to reflect rapidly changing sources of business risk. Although following these standards is usually voluntary, adherence may be required by industry regulators or through business contracts.

Risk management strategies and processes

All risk management plans follow the same steps that combine to make up the overall risk management process:

  • Risk identification. The company identifies and defines potential risks that may negatively influence a specific company process or project.
  • Risk analysis. Once specific types of risk are identified, the company then determines the odds of it occurring, as well as its consequences. The goal of the analysis is to further understand each specific instance of risk, and how it could influence the company’s projects and objectives.
  • Risk assessment and evaluation. The risk is then further evaluated after determining the risk’s overall likelihood of occurrence combined with its overall consequence. The company can then make decisions on whether the risk is acceptable and whether the company is willing to take it on based on its risk appetite.
  • Risk mitigation. During this step, companies assess their highest-ranked risks and develop a plan to alleviate them using specific risk controls. These plans include risk mitigation processes, risk prevention tactics and contingency plans in the event the risk comes to fruition.
  • Risk monitoring. Part of the mitigation plan includes following up on both the risks and the overall plan to continuously monitor and track new and existing risks. The overall risk management process should also be reviewed and updated accordingly.

Risk management approaches

After the company’s specific risks are identified and the risk management process has been implemented, there are several different strategies companies can take in regard to different types of risk:

  • Risk avoidance. While the complete elimination of all risk is rarely possible, a risk avoidance strategy is designed to deflect as many threats as possible in order to avoid the costly and disruptive consequences of a damaging event.
  • Risk reduction. Companies are sometimes able to reduce the amount of effect certain risks can have on company processes. This is achieved by adjusting certain aspects of an overall project plan or company process, or by reducing its scope.
  • Risk sharing. Sometimes, the consequences of a risk is shared, or distributed among several of the project’s participants or business departments. The risk could also be shared with a third party, such as a vendor or business partner.
  • Risk retaining. Sometimes, companies decide a risk is worth it from a business standpoint, and decide to retain the risk and deal with any potential fallout. Companies will often retain a certain level of risk a project’s anticipated profit is greater than the costs of its potential risk.