Five Reasons to Develop Your Risk Management Framework

What is Risk Management?

Risk management is the process of identifying, assessing, and mitigating the potential threats and opportunities that may affect the achievement of an organisation's objectives. A risk management framework is a set of principles, policies, procedures, and tools that guide and support the implementation of risk management across the organisation.

 

So why would you want to do that?

 

  1. Enhancing decision making: A risk management framework helps to provide a consistent and structured approach to evaluate and prioritise risks and their impacts on different aspects of the organisation, such as Strategy, Operations, Finance, HSE, Governance & Compliance, etc. This enables better informed and more transparent decisions that align with the organisation's risk appetite and tolerance levels.

  2. Improving performance: An aspect of risk management that is often overlooked is opportunity. A risk management framework helps to identify and exploit opportunities that may arise from uncertainty and change, as well as to reduce or avoid potential losses or damages that may result from adverse events or situations. This leads to improved efficiency, effectiveness, and resilience of the organisation's processes and outcomes.

  3. Increasing stakeholder confidence: A risk management framework helps to demonstrate the organisation's commitment and capability to manage risks in a proactive and systematic manner. This enhances the trust and credibility of the organisation among its internal and external stakeholders, such as customers, employees, investors, regulators, suppliers, partners, etc.

  4. Complying with requirements: A risk management framework helps to ensure that the organisation meets its legal, regulatory, contractual, and ethical obligations related to risk management. This reduces the exposure to potential penalties, fines, lawsuits, or reputational damage that may arise from non-compliance or negligence.

  5. Fostering a risk-aware culture: A risk management framework helps to promote a culture of risk awareness and accountability throughout the organisation. This encourages a shared understanding and ownership of risks and their implications among all levels of staff and management. It also fosters a learning environment where risks are regularly identified, assessed, monitored, reported, and reviewed for continuous improvement.

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