Most companies struggle when it comes to managing risk. This is because they tend to make it more complicated than it needs to be and this leads to people in the company becoming confused, disinterested and ultimately making the whole process harder. Risk management doesn’t need to be a complex process, in fact, it’s most successful when it’s kept simple.
With the work we do at Prism Energy, the one consistent theme we see is that the majority of businesses think risk management is about identifying negative threats, however, a failure to identify and pursue positive opportunities can be just as harmful. As humans, we learn to manage threats and opportunities from birth using a very simple approach – what can hurt us and what can help us. Maintaining this simple approach will benefit companies of all sizes.
The second area where companies can improve their risk management is in the process itself. Companies need to be proactive about their risk management process and this needs to be driven from all levels in a company. The key to success comes by identifying simple actions (or mitigations) to reduce the chances of a threat or maximising the opportunity to the business and reviewing progress on a regular basis. All too often companies create huge risk registers on spreadsheets and identify mitigations but never actually do anything to progress them. It is not enough to just identify risk, the mitigations need to be continuously managed.
The final point is on visibility. For risk management to be most effective it needs to be visible at all levels of a company and regularly discussed. A common issue, particularly for larger companies, is that the risks for different areas are all held in different spreadsheets and there is no summarised company-wide view to show where the major threats and opportunities exist. Having this overall view enables everyone in the business to understand priorities and to make decisions accordingly. By making use of a low-cost risk management system companies can solve a lot of the problems we have identified and will create a much more open, proactive and visible approach to risk management.
Risk management doesn’t need to be complicated and works more effectively when kept simple. For more information on how your company can effectively manage its risk management or for information about our low-cost risk management system, visit: www.prismenergy.co.uk or email: info@prismenergy.co.uk
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