What To Consider As You Form Your Risk Management Plan

At some point in your business lifecycle, you will have to create a risk management plan. You may already have a risk management plan, but the need for a robust plan grows as your company grows.

Every company is unique and should have a tailored risk management plan. This is one area of business where one size does not fit all. On the downside, risk plans take time to evaluate and implement. The upside is there is no better expert about your company than you. So, you already have one subject matter expert on your team.

However, it is never a good idea to create something without some independent input, so you should also seek help from qualified experts.

Ask yourself these questions:
In a survey published by the North Carolina State University, researchers identified several key points every risk manager should take into account when creating a plan.

• What is the likelihood of the risk?
• What are the impacts the risk would have on your company? Consider the financial, legal, and reputation risks caused by the incident.
• If the incident occurs how fast could it be, and how rapidly would it involve your company?
• What would be the length of time for the impact of the risk?
• How prepared is your company to deal with the risk? Could you quickly control it if the incident occurred?
• Could the risk lead to a chain reaction of other incidents within your company or your logistics chain?
• What is the life expectancy of the risk, and how will it change your company while it is occurring?

Risks Occur From Unexpected Changes
If you believe risk only stems from catastrophic events, think again. Consider something very beneficial occurring in your company, say you bring on a large corporate client. The new clients could require increased shipments of product or more and repeated meetings at locations around the world. Furthermore, you may need to expand your facilities and capital investment.

However, consider how each of those changes could affect your company.

• Increased shipments might mean more vehicles on the roadway, maybe more employees, and increases with liability and higher insurance rates.
• Frequent meetings mean you will have to send employees, perhaps key executives, to other parts of the world. Besides the obvious costs, there is the risk of continuous travel.
• Increased revenue means you risk having an increase in your need for machinery, tools, material, or other things. This could mean increases in your property and liability needs.

The point is risk management is a fluid process. Yes, you should have a plan that covers the basic operations of your business, but your risk management plan should scale as your business grows.

At Culture Insurance, we are experts in risk management. We have a tremendous amount of experience in helping companies develop comprehensive risk plans. We invite you to contact us if you have any concerns regarding the risk your company faces and what steps you can take to mitigate it.