Michael Quinn Kaiser is a successful risk management consultant who spends his days helping his clients determine how to measure risk in their business.
Once a company’s risks have been identified, it is important to develop a solid plan for dealing with each of those risks, so that they can be continually managed. Creating a risk management plan is one of the most important things a business can do in order to be prepared to deal with the adverse events.
The first order of business is to develop a solid risk management plan. Depending on your company’s needs, the plan format can vary, but here are a few essential items that should be included in your risk management plan.
· A complete list of all individual risks.
· A rating of the individual risks based on their likelihood and impact.
· A complete assessment of current controls.
· A plan of action to deal with those risks.
Decide How to Handle the Risks
After you have identified the risks, prioritized them based on the impact to your business and how likely they are to occur, and assessed how effective your current controls are for handling the risks, you need to make a decision on whether you will avoid the risk, reduce the risk, transfer the risk, or accept the risk.
Each of these strategies has their own advantages and disadvantage to consider.
· Avoiding the risk completely is an effective way of dealing with it. By halting the activity that is causing the potential problem, you can eliminate the chance of incurring losses in your business. However, doing this will require you to lose out on any potential benefits the risk may contain.
· Reducing the risk by taking steps to make any negative outcomes less likely to occur, or to find a way to minimize its impact when it does occur. This is the most common strategy and is great for a wide variety of risks.
· You can transfer many of your businesses risk to an insurance company by insuring your vehicles and properties and obtaining different kinds of liability insurance to protect yourself from lawsuits. For risks that have a large potential impact, this is the best option.
· In the case of minor risks, it is best to accept them. For those risks that received a low score for likeliness and impact, try to find a simple, low-cost solution for dealing with it.
Recommended to read: Michael Quinn Kaiser Works at 2MQ Risk Management Consulting
Putting a plan in place isn’t enough to mitigate your risks, you have to continually monitor your business in order to identify and deal with new risks. Michael Quinn Kaiser helps companies identify risks and develop plans to keep their business running as a risk management consultant in California.