Within some sectors, there is the belief that risk management is only something that big corporations and financial institutions ever worry about. This just isn’t the case, and in 2021 risk management in your organisation has never been more important, regardless of whatever sector you’re in.
It’s not a fad, nor is it something that has to break the bank, but it is an area that virtually all companies need to consider on some level.
Proper Risk Management Saves Money, Not Loses It
There’s a perception that risk management is just another area of compliance that will drain money from your company’s already stretched budget. This really isn’t the case at all, especially when you’re part of a sector in which you could potentially face litigation — the vast majority of sectors these days — risks to physical safety of yourself or employees, risks of employee action reflecting badly on the company…the list goes on.
All of these risks have something in common, they are far more expensive to deal with than it would have cost to have some proper risk assessment and auditing done ahead of time in preparation for if and when it happened.
Laws and Regulations are a Potential Minefield
A number of important and landmark acts of parliament in Australia have done much good in protecting people from various harms, but the added risk to businesses who are exposed to legal actions from staff or clients claiming the protection of these rules makes them a potential disaster.
Government statistics from 2018-2019 showed that the Australian Human Rights Commission received almost 14,000 enquiries from people wanting to make complaints on the grounds of disability discrimination, sex discrimination, harassment, bullying and other matters. Discrimination, bullying, harassment can happen just about anywhere and there are very serious laws governing how people can respond to them.
Effective risk management would study all these areas of potential grievance and build effective strategies to minimise that risk. No matter how good things seem at one time, it’s crucial that any business or organisation is prepared for when things take a turn for the worse.
Risk Management is Needed in Just About Every Sector
Even those sectors focused on human contact, spirituality, health and well-being, education and other things for which we hold deep and positive associations cannot escape the need for risk management. Action is required in a world where fears are heightened, people are concerned about many different things, and where the potential penalties can be so damaging both to balance sheets and to company reputations.
Specific Situations are Impossible to Predict, but not the Broader Risk
Risk management doesn’t look at dealing with very specific situations of conflict and risk within a company or organisation. There are infinite things that can happen at different times and to different people. What can be prepared is strategy and safety nets to cover as wide as possible a range of situations. Government offers comprehensive guidelines and advice on why risk management matters.
Trying to prepare for every specific situation is a drain on resources for probably very little reward, but by comparing probabilities and potential impacts, your company can quickly identify areas where you need protection. This allows you to use resources more effectively.
Being Prepared is Good for Business
Whether your operation benefits more from profit or reputation — or a combination of both — risk management is a serious field that warrants your proper and thorough exploration. In 2021 and the age of heightened concern and worry all around, it’s best to be prepared. Proper assessment of risk will ensure your profit margins and reputation are better kept intact.