Have you ever heard about risk management?
Doubtlessly, Sudan is one of the riskiest environments to start or even sustain a business in, starting from limited resources, e.g., unexpected electricity cuts, to dealing with the crippling economic and political situation.
Such dynamic and challenging environment imposes plenty of risks for sustaining a business, let alone making profits, especially for emerging business owners. Therefore, having a holistic view of the potential risks and devising the needed responses and resources to deal with them is fundamental for a business success. This process is known by the term: Risk Management.
First, let’s understand more about Risk Management
What is it? In simple terms, risk management is the standardized process to ensure the maximization of returns or profits and the minimization of risks or loss. That translates to determining to which extend you are willing to take risks in order to achieve specific objectives. In addition, effectivity in risk management means attempting to predict and control, as much as possible, future outcomes. Thus, it offers the ability to reduce both the possibility of a risk occurring and its potential consequences.
With that being said, an integral part of risks management is the early adoption of the process into the business plans. That means being proactive in taking actions before that risk happens, rather than being responsive to them. And that is one of the benefits of risk management as that it allows businesses to strategize more realistically and to make decisions more quickly based on their prior assessment.
What’s the risk management process?
Risk management process includes the identification, assessment, and preparation of responses to upcoming risks. It is bound by monitoring, reviewing, and focusing on continuous success, targeting goals and growth plans. Here’s the graph to explain this process followed by steps:
1) Identify Risks
Before, you identify potential risks and challenges on the business, there is a need to thoroughly examine the context the business in operating in and to understand its long and short terms goals. Identifying risks comes next, and it is the best way to prepare for eventualities that may come in the way of growth. In this step, you list all possible risks, categorize them, and seek to understand their causes. It requires intensive brainstorming sessions with the team and stakeholders.
2) Assess Risks
Once risks have been identified, it is then easy to mitigate and deal with, providing the basis upon which you can undertake more sound decision. After you have done that exercise, it’s time to assess or measure the likelihood of the listed risks and their possible consequences on the business objectives. This requires clear measurement tools and structuring formats.
3) Prepare Risk Responses
After you have identified risks’ categories, assessed their likelihoods, and gauged their possible consequences on the business, at this stage, you make a plan of action. To do that, ask what type of actions to be devised in response to these risks? What are the additional resources required in case they happened? And, who is responsible of implementing risks responses? Finally, how are you going to document this process?
4) Monitor & Review
After doing these three steps, you are left with constant monitoring and reviewing. As time progresses, circumstances may change, hence the devised methods and actions needs to be on continuous reassessment through out the process of risk management! For instance, a risk likability may increase, affecting a deliverable’s deadline with a client, which could cause serious damage to your business. For that reason, the constant review of the appropriate timelines and the methods of risks identification, assessment, and responses have to be up-to-date
Risk Management as a Collective Effort!
Pay attention to the culture you are adopting. Just as they are involved in working towards achieving business goals, employees need to have the confidence to question how risks are managed and what decisions are taken. That could be done byintegrating open communication and transparently to the organization culture.