If you're reading this article, you may already know the obvious reasons for risk management planning (assessing, avoiding and mitigating risks), and you're probably already onboard with the concept.
But just in case you're not, what if I told you there are additional benefits to risk management? Ones you might not have thought of?
1. More efficient, consistent operations
Risk management planning is about more than just making sure you comply with HR regulations (though that's really important). And it's about more than just evaluating the risks associated with a new initiative (though that matters too).
An important part of risk management is assessing operational risks. Say you run an independent restaurant and bar. Are there ingredients that would significantly affect your ability to operate if they weren't delivered as expected? Of course there are!
So you come up with a plan B, and survey grocery stores to find which one carries everything you might need. Now your restaurant can still satisfy patrons even if something goes wrong, which can help you be more consistent and efficient.
That's a part of basic operational risk management planning.
2. Increased focus on security
Whether it's data, confidential company information or even basic physical security, risk management planning can lead to an increased awareness of just how vital security is to your company's health.
Let's say you decide to install a key-card entry system into your office. Not only can it help you control and track who's entering and when, but it's also an opportunity to discuss security in general.
Even for small offices, stores or manufacturers, security matters. Workplace violence, safety from physical hazards, the importance of good password hygiene… all of these important topics fall under the heading of security. Effective risk management planning would entail addressing them with your entire staff.
3. More confident, successful initiatives
Risk management planning doesn't mean avoiding taking chances. And it doesn't mean never expanding, growing or scaling up your operations.
But it does mean evaluating the risks of taking on new ventures, and making the best decisions you can.
Perhaps you decide you're ready to grow your accounting business. You're going to open a second location in a neighboring state.
You know you'll have to get up to speed in terms of HR compliance and any differences in state regulations that affect accounting practices, but there's a whole lot more to risk management planning. You'll need to assess any risks to your existing business. Will you spend inordinate amounts of time on the new location? Will existing employees prefer the new branch? Will your marketing budget be dramatically affected?
If you take the time to evaluate risks for both of your locations, you can have more confidence in your decision if you decide to move ahead. Not only can it help you avoid some preventable pitfalls—you may also be more ready to mitigate problems as they arise.
4. More satisfied customers
Risk management planning isn't magic, but it can have a profound effect on the way your company operates.
Improving operational efficiency and consistency can help make your customers happier. Improving data security can prevent downtime, which can also affect your customers' happiness. A business that grows sustainably can attract more happy customers.
Companies with sound risk management planning tend to have more engaged employees who are invested in better customer outcomes, which can also leads to—you guessed it—happier customers.
5. A healthier bottom line
Companies worldwide spend fortunes cleaning up messes they could have prevented.
Your company doesn't have to be in that predicament. Risk management planning can help you avoid problems by making sure you're in compliance with regulations and implementing proper security procedures. It can also help reduce the costs associated with many incidents.
A customer could slip and fall at any time on your company's premises. But having adequate insurance and policies that do everything possible to avoid such incidents can dramatically reduce your liability in the case of a lawsuit.
Operationally, your business might struggle to serve customers if one employee no-shows for a shift. Having a backup roster can help prevent that fallout.
Consider these less-discussed benefits of risk management planning, and you may find your business on the receiving end of these rewards.
Read more articles on risk assessment.