Risk management plan
The risk management plan identifies strategies and processes that have been developed to help you manage any potential risks.
A good and successful risk management plan should have the following elements:
- Risk management should cover all business aspects
- Provide a clear flow of information so you can identify risks and address them correctly.
- Quickly respond to changes in the work environment, helping you make the right decisions.
Key focus points
Before you start working on your risk management plan, it is very important to identify the areas you will be covering. Here follows some points that you can consider when preparing your plan:
- Social, cultural, political and regional issues.
- Economic, technological and competitive trends.
- Government policies and laws.
- Business strategies, policies and goals
The importance of complying with the risk management plan
Some business owners do not pay enough attention to risk management processes in the workplace, although adherence to a good risk management plan will help them establish stable businesses, ready to cope with unexpected events.
Therefore, it is important for business owners to:
- Ensure that their risk management plan is well aligned with their business objectives.
- Inform all concerned parties about the plan and explain it to them in detail.
- Demonstrate adequate support for risk management processes.
- Develop a mechanism to measure the success of their risk management plan.
- Ensure that their measurement method provides them with useful information.
- Clarify the roles assigned to each person.
- Provide adequate resources covering all levels and stages of work.
- Survey all stakeholders, including customers and suppliers.
- Use the feedback to update the plan.
- Explain the concept of risk management to new employees through training courses
Consult with stakeholders
Your risk management plan will be more useful and specific, when you poll stakeholders and secure their feedback. These stakeholders could include people, businesses or even organizations that:
- are affected by your business activities.
- Their activities can affect your business.
- Employees and contractors
- Customers, suppliers and consumers
- Financiers, investors and insurance companies
- Local communities and media
- Government agencies.
Consulting with these stakeholders will help you:
- Secure adequate support for your risk management plan
- Combine areas of expertise and different perspectives
- Enhanced response to unforeseen risks
- Identify the most damaging risks
Setting risk management standards
Once you have obtained the needed information from stakeholders, it’s up to you to make decisions about your risk management standards
At this stage, you should indicate the level and nature of acceptable and unacceptable risks in your workplace. These standards give you a measure that you can use to assess risks to your business.
Ahmed runs a construction company. In his risk management plan, Ahmed identified the safety of his employees as one of his key business objectives. After consulting with his staff, contractors and customers, he decided that the acceptable level of risk with respect to his safety procedures is zero. In his internal risk policy, he highlighted the need to adhere to safety procedures at all times to eliminate any risks that would cause injuries or deaths in the work environment. After that, he made sure that all stakeholders were informed of the risk management plan and policies. He also made sure to provide training to his staff in the area of safety and clarify who is responsible for the specific risks that may threaten their safety.