Risk Management Process and Insurance

An effective risk management process will assist identifying, analysing and controlling risks to your business

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Risk Management Process and Insurance

Do you find the availability and cost of business insurance challenging? A risk management review could save you time and money

Arrange a call back and ask for a Risk Management Review, one of our specialists will then give you a free 15-minute call to discuss your needs.

After the initial consultation, we will typically agree a one-off charge of up to £250 and earn a fee of up to 25% of the savings made across your insurance program.


Why do you need a risk management process?

No business can be successful without taking risks, the question is how much risk can you accept in order to achieve your strategic objectives?

A risk management process can ensure you achieve your objectives without taking unnecessary risks. Manage threats to your business effectively within a defined framework.

Finding a balance between risk and reward is a continual challenge for any organisation. Below we take a look at how a risk management process can add value.


    What is a risk management process?

    A risk management process is the framework of identifying, evaluating & controlling potential threats to the business. It will consider different risk management strategies to address exposures within a tolerance level acceptable to the business.

     
    Risk Management Process Steps


    How does a risk management process work?

    All risk management processes follow the same principles, that enables your business to manage uncertainty in an effective and systematic way.

     

    1. Identify risks to your business

    The first step of a risk management process is to investigate and detail risks that might affect your business or objectives. There are a number of risk management tools available such as risk assessments and risk reviews that can assist with identifying & recording risks.

     

    2. Analyse and measure the impact

    The second step of a risk management process is to determine the likelihood and consequence of each risk. By evaluating each risk, it is possible to quantify the potential to impact your business or objectives. A risk register is a valuable risk management tool to record and score the potential risks.

     

    3. Decide which risks are unacceptable

    The third step of a risk management process is to take decisions concerning which risks are unacceptable compared with your risk appetite. Risks that are acceptable should be monitored and reviewed on a regular basis. Whereas risks that are unacceptable should either be avoided, reduced or transferred.

     

    4. Mitigate or transfer any unacceptable risks

    The fourth step of a risk management process is to action risks that cannot be avoided should either be reduced or transferred to an acceptable risk tolerance level for the business. Consider ways to mitigate the exposure including the use of business insurance to transfer unacceptable risks.

     

    5. Contingency planning

    The fith step of a risk management process is to consider risks that cannot be managed. If your initial plan to control the risk fails, what is your plan B? For example, in the event of a cyber breach, what are the steps to effectively respond and mitigate the impact after the incident has occurred?

     

    6. Monitor and review regularly

    The sixth step of a risk management process is to continually monitor, review and report on risks to your business and objectivesThe risk management process does not finish once the risks have been identified, analysed and controlled. Your business and its objectives will continue to be exposed to new and emerging risks.


    Why is risk appetite important to your organisation?

    Identifying your risk appetite is an important step in the risk management process and will also assist with strategic and operational decision making. It goes to the centre of the business and will impact how you deal with customers, employees, regulators and shareholders.

    When risk appetite is clearly understood and communicated, it becomes a powerful tool not only for managing risk but improving performance. An effective risk management process can protect your organisation against financial shocks, improve decision making and optimise operational efficiency. 

    The Institute of Risk Management (IRM) is the leading body for professional enterprise risk management and have produced an insightful paper on Risk Appetite & Tolerance.


    What risk management process tools are available?

    The below are commonly used risk management process tools to monitor and report on risks within your organisation:

     

    Risk Assessments

    Are completed per activity, with the aim to identify hazards and risk factors that have the potential to cause a harm and evaluate the risk associated with that hazard.

     

    Risk Reviews

    Are completed with a view across the entire company, with the aim to determine appropriate ways to eliminate the hazard or control the risk when the hazard cannot be eliminated.

     

    Risk Register

    Identifies key areas of risk in terms of potential frequency and impact, highlights issues that require attention and allocates responsibility. Once the risks have been identified, a simple spreadsheet with a basic scoring mechanism can serve as a risk register.

     

    Business Continuity Planning

    Will consider the major risks your company and identify both short and long-term solutions to mitigate the impact. A business continuity plan will be specific to your organisation and identify responsibility with a crisis management hierarchy should an incident occur.


    Can we assist with improving your risk management framework?

    We work with a risk management partner who is an expert within their speciality and can offer a range of services, which include creating and improving upon your risk management framework.

     

    Risk process reviews

    A comprehensive review of the risk management plan and process can offer an independent review of your ability to accurately identify, measure and control risk. Reviews can be carried out at a single location or across different locations of your business to identify any inconsistencies that might increase risk levels.

     

    Management and board reviews

    An independent review of the board, management structure, risk management strategy, and the individual skills and behaviours of the management team, can provide a valuable insight. Findings can be reported to identify solutions for optimising structures, practices and resources.

     

    Claims or incident reviews

    A comprehensive review of large losses and claims histories can identify a range of preventative measures to reduce the risk of incidents reoccurring. An independent review will often be able to report a range of solutions that combine risk management with your business insurance.

     

    Organisational learning reviews

    Key learning issues can be identified to ensure your organisation can deliver on its risk management strategy. Findings can be reported to identify any structural, process and behavioural changes required. New strategies can be developed to ensure risk management is embedded within your organisational culture.

     

    Arrange a free 15-minute call back to discuss your individual requirements and see how we can support and improve your risk management processes.

     

    Steps to improve risk management process


    This guide is for information purposes and based on sources which we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.