Improving Risk Management Company-Wide

In order for organizations to effectively manage the variety of evolving risks that threaten to disrupt their ability to function, risk management responsibilities can not fall solely on the shoulders of risk managers or even entire risk management departments. 

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Instead, effective risk management must be a company-wide undertaking in which every employee plays a role, and yet many companies have not built the necessary framework or fostered a workplace culture where that kind of grass-roots, comprehensive risk management can be attained. 

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The good news is that there are a number of different steps that organizations can take in order to build a risk management framework that is better-suited to meet the needs of the current risk environment:

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• Create Formal Processes & Protocols: Clearly-outlined processes, protocols, and controls must be synchronized and enmeshed into all levels of company operations so that relevant risks can be identified, prioritized, and addressed systemically.

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• Establish Clear Governance Structures & Enforcement: In order to ensure that risks are properly assessed and handled by the appropriate decision-makers, employees must have clear understandings about how those processes, protocols, and controls function as well as what to do when they encounter uncertainty about how to address a given risk, while employers must have governance structures in place to provide oversight and accountability when communication breakdowns occur and/or performance expectations are not met.

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• Invest in Risk Management Infrastructure: The processes, protocols, and controls shaping both risk management and the governance structures overseeing it all depend upon data collection/analysis and communication systems to inform decision-making and link the array of role players that make up the company’s risk management network. 

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• Promote Risk Management Culture: Perhaps the most important precondition for creating a risk-management optimized work environment is to set a tone that prioritizes risk management, including accounting for risk-management activities in employee work output targets and providing additional training and education that incorporates real-life case studies and simulation exercises.

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You can read more about how to create a more risk-aware culture and the framework to support it here. 

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