This archive report was first published on 13 January 2020.
As the German poet Johann Wolfgang von Goethe once said, 'prevention is better than cure.' This timeless wisdom remains relevant today, especially in the business world where organisations must navigate complex risks to achieve their objectives.
On January 13, 2020, Ndirangu Ngunjiri wrote in Business Daily Africa that developing effective risk management strategies is a full-time job. He noted that many organisations do not fully understand the risks they have assumed and whether they are monitored, managed and aligned with risk tolerance.
A well-crafted risk management strategy can help companies plan for risks, establish how to deal with them, and save time, money, and unnecessary disruptions. While no one can predict the future, organisations can use the past to develop a risk plan that produces success.
Before identifying and assessing risk, it's essential to get the basics right. This includes having a risk management plan that is part of daily operations, helping to deal with threats without delay. Regulations, management priority, and emerging risks are also crucial considerations in risk management.
Developing a risk management plan involves several steps, including identifying risks, performing a risk assessment, analysing risks, assigning responsibility, and developing a strategy. It's also essential to update the plan regularly to ensure that potential threats are not overlooked.
Using a risk culture, organisations should support risk management through executive communication and exhibit desired risk management behaviours. Determining a risk appetite is also critical in understanding the risks and aligning views before an incident occurs.
By getting risk management right, organisations can solidify their operations, gain a competitive edge in the marketplace, and ultimately achieve their business objectives.
