Risk management is not a one-time thing. It’s an ongoing process that requires you to be vigilant and proactive about identifying and managing risks in your organization. Here are the steps you should take today to get started.
1. Identify Risks
One of the most important initial steps in your risk management program is to identify all the risks your organization faces, no matter how big or small. You can do this by simply creating a comprehensive list that includes internal and external factors that could threaten your business’s operations and security. For example, for a company that stores large amounts of chemicals in tanks, the risks include:
- Issues with the equipment like tank breach and corrosion causing leaks
- Human error like mishandling chemicals or stealing chemicals
2. Analyze Risks Based on Severity and Likelihood
When you’ve compiled your list of risks, it’s important to assess each one based on its severity and likelihood of actually happening. You can do this by assigning a risk score to each risk. A risk score is a numerical value between 1 and 100, with a higher number representing a greater level of impact or a higher probability that the event will occur.
3. Prioritize Risks Based on Severity and Likelihood
After you’ve assessed your risks based on their severity and likelihood of actually occurring, the next step is to prioritize each risk according to its risk score. By prioritizing your risks in this way, it is easier for you to focus on the highest priority items first while also ensuring that even low-priority risks get managed somehow.
4. Treat High Priority Risks First
When it comes to risk management, the most efficient way to start is by focusing on the high-priority risks that you’ve identified for your organization. This means that if any of your high-priority risks do occur, you don’t have to worry as much about the impact because you’ve already taken steps to limit or mitigate damage. In the example of companies that store large amounts of chemicals in tanks, you can line them with a tank liner to prevent corrosion.
5. Monitor Risks and Re-Assess as Necessary
You need to constantly monitor the risks you’ve selected according to your risk management plan and re-assess them regularly to ensure that your risks are always being managed efficiently and effectively.
The US Environmental Protection Agency maintains a list of 140 chemicals that necessitate the submission of a “risk management plan” to federal authorities if stored in large amounts. Creating a risk management plan can be complicated, but it is well worth the effort.