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Risky Business: What Are the 5 Steps in a Risk Management Process?

Feb 02, 2021 MicroBilt News

Risky Business: What Are the 5 Steps in a Risk Management Process?

The idea of risk management seems like a given for any business. Simply knowing what a risk management process is isn’t enough. But learning the five steps will show you just how much time, effort, and even better, the money you can save. 

1. Identifying the Risk 

To begin the risk management process steps you must first identify the risk or risks that are present.

As there are distinct differences between each type of risk, each organization must identify risk before proceeding with developing a plan utilizing the steps that follow. 

A wise practice would be to establish consistency using available resources or a database system. This allows for the recording of relevant information. This is accessible on-demand to all workers and stakeholders. 

If the information is easily visible, future risks can be more easily avoided or dealt with.

2. Measure the Frequency and Severity of the Risk

Even if you identify a risk this does not give it a 100% chance of it occurring. A review of data must be made to determine the likelihood of occurrence and the level of damage it would inflict should the event arise.

Through this analysis, you will be able to determine the link between risk and operating factors within the organization. By drawing these correlations you will be able to determine the exact areas to pay the most attention to in order to prevent problems.

3. Rank and Examine Solutions

Just as categories are defining the types of risks there are categories to rank the severity and priority. There would be a greater level of urgency addressing a risk that would bring operations to a halt over one that is a simple inconvenience.

The ranking offers another benefit. Just as measuring allow you to determine links between risk and operating factors, by ranking these risks you can get a much clearer, holistic view of the working operations.

4. Treat the Risk

The best strategy is to form a working relationship with professionals in each of the fields that visible risks operate. By discussing the risks with these people you can generate and strategy and a solution. 

The continued updates on the planning should be added into the aforementioned risk management solution to allow for access from all workers and others involved. 

Helpful identification and predictive tools can be effective in the prevention of future risk events and should be considered as part of the treatment process.

5. Risk Management Process Results and Monitoring

The risk management process is just that, a process. This is not a project that has a set “endpoint”. Once the process is in place you need to continue to observe it. This should be part of the standard workplace operation. 

Over time risks will change and the chance for a problem to occur will change as well. With these changes, the management process needs to adapt. This could mean even starting from scratch.

Risk management is an organic process that will provide a stronger workplace and safer operating environment if eyes are kept on it.

Keep the Workplace Safe and Secure 

The five-step risk management process, as you now see, is not an overly complicated one as long as you keep an active eye on the ins and outs of the workplace. Risks come and go so you need to be vigilant to keep the workplace safe.

The impact of a risk, especially a financial one, can be hugely damaging. But if you work with experts like MicroBilt you can be sure you are keeping yourself and your organization in a safe place.