An effective risk management plan is something that all companies should strive for, regardless of industry or size. However, achieving this goal can be complicated, and missing a critical component could lead to higher workers compensation insurance costs and other expenses.
As risks change across the U.S., managers have to be able to grow and adapt to these varying dangers. Today's problems are relatively unique, and it takes a customized plan of attack and a motivated workforce to cultivate a safe, efficient workplace. In order to do this, one risk management expert stressed the importance of resiliency as a means to handle threats and prevent any issues from disrupting the business.
Risks are bound to happen
Risks cannot be avoided. This was the sentiment expressed by Stephen Flynn, a political science professor and director for Resilience Studies at Boston-based Northeastern University. He explained this idea during a recent keynote speech at Business Insurance's Risk Management Summit in March. Many companies aim to remove risk altogether, but it is often a better strategy to create a business model that can withstand problems.
"In the latter half of the 20th century, we seduced ourselves into thinking that we could reduce risk to near zero," Flynn said at the Risk Management Summit, according to Business Insurance. "In the process, we started to lose some of skill sets we need when a risk does manifest itself."
Instead, a risk management plan should be resilient, with improved modeling, design and planning, Flynn noted. These steps should take place before any event occurs, so when something does happen the company can withstand the negative effects and move forward.
Risk management starts at the top
In addition to a resilient risk management plan, a company has to establish quality leadership and other key components to ensure effective mitigation and loss control. Creating this isn't something that can happen right away – it instead takes time and effort.
According to The Nonprofit Times, one of the first steps is to take a look at the governance structure of the organization. This includes creating risk committees, risk policy and defining how much a company can take on. After that, it is easier to determine the risk profile and the likelihood of an event and what that impact would be on the operation.
Understanding these elements will allow a company to come up with an adequate response. Ideally, it will be resilient in some form to allow for continued business growth and success.
