Risk Management for Changing Times
When I was a little girl, I spent several summers farming with my grandparents. They were often worried about the weather and planning ahead to get the most out of their crops.
They focused on each and every aspect of what their customers wanted, anything that could affect their ability to deliver what they promised. Little did I know that they were giving me an early primer on risk management.
Like my grandparents, most organizations today face industry challenges that come in many forms and force them to manage risks. Unlike my grandparents, organizations now serve empowered consumers who can inflict damage on their brand with the click of a button.
“Organization’s stakeholders need to buy into the idea of risk management, & take ownership of the strategy.”
As such, taking a page from my grandparents, companies of all sizes should create a solid risk management strategy.
Now is the time
Arming against challenges and other risks is important to protecting your business, but a solid risk management strategy accomplishes so much more. It leads to the development of a risk-conscious culture, which puts people in the right positions to best assess risk – this is invaluable in business today.
Your organization’s stakeholders need to buy into the idea of risk management, as well as take ownership of not only the strategy but any new business models that come from it.
The following techniques will help you develop an effective risk management strategy:
Risk assessment: Understand the probability of risk occurrence, as well as the level and impact of exposure both directly and indirectly.
Risk acceptance: Know when to accept risk and what it is worth. In some cases, you may be willing to deal with the outcome of what happens if you do nothing. In other cases, you may want to institute preventative measures that produce desirable outcomes.
Risk avoidance: Avoid risks by implementing policies and establishing measures that will reduce or eliminate your organization’s exposure. Also keep stakeholders informed and educated so they will know where vulnerabilities exist.
Mitigation: Develop a risk reduction plan that best fits your organization, and identify the consequences for not changing behaviors.
Monitoring: Evaluating how your risk mitigation strategy and plans perform is essential to risk management. Monitoring is also a way to track specific risks and actions for mitigation. Additionally, this provides a way to identify gaps, addresses inefficiencies or make additional improvements where necessary.
Risk transfer: Be sure and be insured by transferring the risk to another party. The idea of insurance is not new, but it does remain relevant. If you are a domestic or global shipper and you are concerned about getting your shipments to your customers on time or damage or even protection from consequential losses, insurance is right for you.
Back on the farm
Identifying challenges and managing risk exposure are important. It is what my grandparents did every day on the farm — and instilled in me at a young age.
Without it, you open your business up to the whims of an unforgiving marketplace.
If you put all that energy into planting business seeds, like my grandparents did, why not protect the fruits of your labor?
This article first appeared on UPS’s thought leadership blog, Longitudes, and was republished with permission.
Insurance is underwritten by an authorized insurance company and issued through licensed insurance producers affiliated with UPS Capital Insurance Agency, Inc. and other affiliated insurance agencies. UPS Capital Insurance Agency, Inc. and its licensed affiliates are wholly owned subsidiaries of UPS Capital Corporation. The insurance company, UPS Capital Insurance Agency, Inc. and its licensed affiliates reserve the right to change or cancel the insurance coverage at any time. The insurance is governed by the terms, conditions, limitations and exclusions set forth in the applicable insurance policy and no warranty, guarantee, or representation, either express or implied, is made as to the correctness or sufficiency of any information contained herein. Insurance coverage is not available in all jurisdictions.
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