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.
