September 12th, 2019
A risk management consultant is an advisor who helps organizations and individuals assess their risk and develop a plan to minimize their exposure to loss.
Although risk management is complex and there is no one process all consultants use, there are conventional methods that risk management consultants use to help protect your business from risk.
Even if your business is in a large industry, no company is just like yours. You have a specific value that you bring to the marketplace, or else you wouldn't exist. You have processes and procedures that are unique to your business and a set of risks that no other company has.
These unique risks need to be discovered and carefully evaluated. From the design of your product/service to the final delivery, Every step of your supply chain and customer journey needs to be evaluated for risks.
Discovering and listing your various business risk is arguably the most critical step in the risk management process. The risks you don't expect will often hurt you far more than the risks you do expect.
Once you have listed out the various threats and vulnerabilities that your business or organization might face, you now need to prioritize your response to each risk by the impact it could have.
Not all risks are created equal; the threat of petty theft is considerably less severe than the threat of a construction liabilty lawsuit. Every business should know the threats to their organization, but more importantly, every business should identify the most significant and most probable risks that could occur.
Once you know your business risk and which threats could have a significant impact, you can now form a plan to protect your business. The plan that you and your risk management consultant create doesn't have to be complicated; It can often involve mitigating a specific risk or just choosing to purchase insurance to cover the exposure.
For example, if you were a manufacturing company that designs and manufactures medical products, a defective product could be catastrophic. A new quality control process in addition to purchasing products liability insurance could nearly eliminate the financial impact of a defective product lawsuit.
In other cases, you may be able to amend language in your contracts to shift liability to vendors, subcontractors, or customers.
Now that you have discovered your risks, assessed their severity, and created a plan of action, what now? You have to implement that plan in your day to day practices. Frequently this involves a shift in culture such as safety awareness that needs to start with you, as the leader of your company.
Implementing a risk management plan can take time and effort, but even a partially implemented plan is better than not having one. If you can mitigate a severe risk even slightly, the project was worth your time.
After you implement your plan, you need to evaluate it's performance over time.
Do you see an improvement due to your plan?
Can you quantify the improvement in any way?
Were all occurrences covered by insurance or paid for by money set aside?
For large organizations, risks can be tracked much easier due to the accident history being available and statistically significant. For a small scale business, most of the time, it is about avoiding a potential loss and is harder to quantify. Either way, find out whether your plan implementation was a benefit to your company's wellbeing.
As with your other business activities, your risk management changes must follow the same continual improvement process. If you do not improve your plan as your business changes and grows, your risk management structure will fall behind.
Risks are ever-evolving, and advances in one area will cause emerging risks in another. An excellent example of this is with advancements in technology. With the efficiencies that technology can bring to your business come new and evolving exposures. The threat of emerging risk isn't limited to technology, but its embedded in every aspect of your business; Don't treat risk management as a "set it and forget it" process.
Make sure you evaluate whether your risk management plans are keeping pace with new exposures in your industry and the economy at large.
A risk management consultant can help you prepare your organization from the damage any single adverse event could cause. If you are interested in talking with a risk management consultant to help manage your business risks, let us know.
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