Risk Management is a key responsibility of any management team but it is often not given sufficient time or energy that its importance demands. It is not only recognising that an event might happen but what to do about it if it does.
It is well documented that 10% of all business go bust each year. This is not only confined to small businesses but substantial ones as well. These failures are in no small part due to insufficient time being spent my management considering the critical “What if” question. Indeed you may ask these questions and have a risk process but unless it is treated by all of management with the right level of importance all too often it becomes a box ticking exercise rather than one that delivers lasting corporate value.
As a Finance Director a significant part of my role is to protect the firm. Considering the risks that the business faces and ensuring it is given sufficient “air time” by management is critical in succeeding in this role. Having a strategy to mitigate the risk or initiate the prepared plan if the risk occurs can be the difference between a business surviving or failing.
There are a multitude of risk systems out there that seek to provide a means to record risks and ensure responsibilities are assigned to staff so that appropriate actions and plans can be made to mitigate them. These systems are generally used by the more sophisticated organisations who have the budget and resources available to implement and manage them. But what of the smaller businesses or SMEs who do not have the financial or head count resources to make such an investment. All too often these organisations will either, ignore the problem and suffer the consequences or they will seek to manage through using Excel or other generic tools. Whilst Excel is an excellent tool it is not ideal for managing and assigning tasks. Furthermore, it suffers because it requires each user updating their actions or risks to do so at a different times or there is a centralised process to input all the updates. This makes the process cumbersome and time-consuming and leads to the system being ineffectual.
OrgVue offers an alternative means to manage and review risk. It is a highly configurable tool that enables users to define a process that meets their specific needs. It is delivered as a Software as a Service (SaaS) in a highly secure web environment enabling multiple users to access and update the system at the same time. Once some of the basic parameters are entered it is easy to update and report on so that management can see what the status of any given risk might be and who is doing what to control it. The highly graphical visualisation tools quickly allow users to “see” what is important and what the next actions are.
Looking at how this might actual work within OrgVue we might have:
1. Set Up: The set up phase where we define some of the key parameters. These could be for example:
There are of course many other parameters that can be fed into this type of risk assessment for example time to effect a mitigation strategy or how controllable the risk is. These parameters can all be supported using OrgVue to meet the specific needs that you might have.
2. Risk details: Risks can then be input using the parameters defined.
3. Risk Management: Once the risk have been input the management team can discuss and agree the parameters using a Pivot Style view that OrgVue supports. The particular benefit of using this view is that it supports drag and drop so that risk categorisation can be immediately updated.
4. Accountability mapping: Now that risk have been input they can be assigned to members of staff using a RASI matrix.
This allows OrgVue to link data that is held in an employee data record to the risk records and then display the detail showing the accountabilities for each member of staff:
It is then possible to record actions against these risks and manage these to ensure that they are being completed in a timely manner. The example shown below shows several actions to mitigate a risk.
5. Reporting: Now that the overall data is in the system OrgVue helps the user to understand it through its highly graphical interface enabling rapid assimilation of the key points. For example a breakdown of the overall impact of the risks by value or who is allocated to mitigating them. OrgVue also supports correlations and dashboards enabling a sophisticated overview of the full data set.
The above is a fairly simple way to get started with a risk management process. Like many of these sorts of processes, it is better to actually “Do Something” and keep it simple than try to add in more nuance, accuracy and rigour with a consequence of having that complexity overwhelm everyone and end up with nothing.
However, in designing your risk management process, you may want to consider the following factors:
- When will risk hit?
- How controllable is the risk?
- A breakdown of the actions?
All things remaining equal, the sooner the risk is likely to hit, the more urgent the actions are. The more controllable it is, the greater the impact of the actions will be. These two points will help you prioritise which mitigation actions you really should chase the most.
The third point is a recognition that to mitigate a risk, often many actions are required. It is clearly not a one-to-one relationship. Equally, one action may impact several risks. This is where a 2 dimensional excel file really lets you down. Excel or other relational databases don’t deal with many-to-many relationships. But OrgVue can.
Lastly, track the progress of the risk and actions. Which people are repeat offenders are delaying or not doing their actions? Which risks keep on increasing in their probability? How good are you at running the process? OrgVue records ever change to every record at the time the change was made. This will start to build a corporate memory and an audit trail. From a risk management perspective, that is pretty powerful stuff.
OrgVue helps to solve a critical business problem in a way that it easy to implement and quick to use. It is therefore ideally suited to smaller organisations who need something more sophisticated than excel but are not yet of a scale to justify a fully blown risk system.
Find out today how OrgVue can transform your risk data with powerful insight enabling you to focus on managing your business more effectively.
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