Managing Business Risk is no longer a one time job, neither is it a part of doing business. Risk Management is now integral to the company processes. With the rapid growth in business and increasing regulatory compliances, risk management has gained significant importance among the stakeholders. One such risk is an operational risk and it cannot be avoided. Every business has operations and they are prone to risks. However, planning your risk mitigation activities will help avoid the cost arising due to risks in operations. Moreover, operational risk is a unique type of risk owing to its majority effects arising from its internal operations rather than external environment, but we should not rule out external environmental factors as they affect your internal operations.
Organizations looking to manage operational risks should act on the following lines.
Every Risk is Significant
Never look at business risks in silos. It has an impact on the whole organization. This calls for viewing risks as an organization-wide challenge. By viewing the macro environment associated with risks, it will build an integrated picture of management and improve the organization’s risk managing abilities.
Set standard processes
Develop standard risk assessment, measurement, and mitigation processes with scope for dynamic activities so as to provide operations manager with meaningful and better decision-making insights. When operations face the risk of high wastage in production, a standard waste to product measurement would help analyze the inefficiencies in production. And making provision for lean manufacturing would help mitigate risks.
Business operations don’t function in silos. So managing risks should not be the responsibility of one department. Collaborating across different functional departments would help understand different viewpoints towards the same problem and help manage risks jointly.
Build a Standard Risk Reporting structure
Establishing controls to be monitored, determining threshold limits, developing an escalation system with automated real-time alerts to concerned authorities would help detect any operational risks before any damage is done. Design a contingency plan in case of any risk detection and analyze the causes of risks so as to avoid it in the future.
Data centralization would help ease the information dissemination among the employees and would keep the employees updated with possible risks scenarios. Increasing employee’s exposure to risks would prepare your employees for any such instances in the future and help them to be ready with appropriate actions to manage risks at earliest. This centralized storage can act as a knowledge bank for the future.
Utilize IT Software Capability
With intelligent risk management software like VComply, segregate important data from unnecessary ones. This would help save time during a crisis and help design more effective actions to be taken for operational risk management. With cloud-based storage, accessing data would be at the click of a button increasing the speed of problem resolution.
VComply provides an integrated Operational Risk Management solution for businesses. Equipped with an exhaustive compliance library and coupled with an easy to use interface, organizations can easily manage operational risks in business.
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