While focusing on a presentation for the Mining sector conference recently, it struck me just how important gestion des risques is for making certain strategic plans become reality. Not just risk management per se, but fully integrated risk, where pretty much everyone in the organization is involved.
Here’s why. Often risk management responsibilities are allocated to your relatively small group of those that have specific functions like safety, environmental management, operations, finance and strategic planning. This has a tendency to lead to a siloed risk management structure where risks are managed independently with limited communication with many other domains. Many risks remain invisible to other areas of the business because they’re anticipated to be handled as an element of the daily responsibilities in a specific domain area, though they have broader impacts. A company-wide approach to risk consolidates risks from all of the domains in a common framework where the implications of risks can be assessed and managed in a fashion that addresses the entire scope in their potential impact throughout the business.
A vital good thing about shifting to some more holistic look at risk is the link involving the risk management process and business planning activities. As an example, risk could be built into the business budget by including cost estimations from threats, expected costs of planned mitigation actions, and potential savings and growth from opportunities. This gives a risk-adjusted take a look at cash flow that is commonly better aligned with actual future performance while driving stronger financial results.
However, the advantages go much deeper than simply improving cash flow (although that in itself is reason enough). Aligning business objectives with risk handling strategies which may have specific action plans creates a level of resilience which is shown to boost the chance of meeting performance objectives in any way amounts of the organization. Risk management starting with the strategic level and cascading down with the organization enables more effective decision making, alignment of priorities and effective usage of resources to mitigate threats and take advantage of opportunities.
While these top-down risk planning activities are generally annual with updates on the quarterly basis, a bottom-up approach should be occurring, on a much more frequent basis that handles changing conditions on time. Identifying threats and opportunities earlier raises the odds of getting the plan, and enables the group to deal with the risk when the treatment pricing is at its lowest.
Another aspect of risk management that is often neglected, due to the fact people don’t have suitable tools, is the quantity of rigor that is certainly applied to the control over a danger. The character of each risk is highly recommended as well as its potential impacts assessed. As opposed to going for a ‘one size fits all’ approach, anyone needs to be able 58dexepky introduce a danger by communicating an appropriate quantity of information, accompanied by some degree of analysis and treatment that creates sense when it comes to time, mitigation resources and risk appetite.
An all natural method of risk management starts as quickly as possible, perhaps being a ‘concern’ before meeting the organization’s standard criteria for any ‘risk’, and extends past the analysis and treatment to incorporate monitoring of actual outcomes, thereby fostering continuous improvement and organizational learning. If you take a stop-to-end holistic look at risk management, involving stakeholders over the business employing a single risk platform where information and knowledge about risks could be shared, organizations develop better foresight and manage risks more proactively, which results in better operational, financial and strategic results.