Poor assessment of risk management can cost a business organization dearly. In fact, risk management is something that is not limited to businesses. Governments, social service groups, and sporting teams should also take risk management seriously as a way of reducing and eliminating threats.
Not only does improper risk management cost businesses financially, but it can also reduce opportunities for business growth. This means that in terms of losses, businesses end up suffering on both ends.
The last few years have also seen the advent and integration of technology and digital growth. While both have opened up new avenues for development, they have also increased touchpoints for vulnerabilities.
In this article, we are going to look at 5 major risk management mistakes businesses need to stop making.
Risk Management: What is it and why you should take it seriously?
In very simple words, Risk Management involves identifying all the possible threats and dangers that the business can face. It includes both present threats as well as the ones that can come up later down the line.
If you are a business that in tune to your company’s risk management and operations, you have probably heard about the SAP GRC. Many businesses in production and supply chain that use SAP have been moving towards the SAP GRC for better performance and productivity.
In terms of evaluating risk, businesses need to know that there is both an element of profit as well as of loss. Risk management allows a business to take steps towards profit while guarding against losses. Risk management also helps in protecting the brand image and credibility.
Risk management also ensures that the business is protected from any harm or damage. It has become a critical component given the increased risks and threats of cybersecurity. As small and medium businesses become targets for criminal hackers, risk management needs to be carried out on a regular basis to guard against them.
5 Major Risk Management Mistakes Businesses Need to Stop Making
- Not Prioritizing Risk Management in the Business or Potential Cyber Attacks
Many business owners and entrepreneurs feel that their businesses are not at risk of a cyberattack. However, failure to acknowledge that you could be attacked is the biggest mistake you could end up making. It is essential that businesses place risk management right at the center of their business and be proactive in their preparedness.
- A Lack of Interest Shown from the Owner, CEO, or Top-Ranking Executives
Many experts have weighed in and stated that risk management is a top-down approach. If the leaders of the business are not taking risk management seriously, it sets a bad example for the employees. This could result in the employees and other lower-ranking employees in the organization to not be careful about following the norms, policies, and more.
- Failure to Set-Up a Specific Risk Management Team
Organizations that understand that risk management can cost them dearly want to put their best foot forward. This often involves employing a specialized risk manager and assigning that person with a team of other expert professionals. Even if businesses do not want to set up separate teams, they should consider working with consultants, on a contractual basis and engage in risk management prevention measures.
- Having Poor Responsiveness to Communication Channels
The efficiency and productivity of any risk management activity is dependant on communication. Effective communication can help coordinate efforts between different teams and verticals. It can allow for the free flow of updated information and ideas that can help an organization collectively.
- Being Too Complacent and Casual about Impending Cybersecurity Risks
Unfortunately, too many times businesses think that they are not at risk, and they let their guard down. This is particularly true of small and medium-sized businesses which feel that cybercriminals will not target them, but that is not the case. They also fail to understand that attacking them and getting their data is often easier since there are usually not as many security measures in place.
The Bottom Line
In the past few years, risk management has grown in organized business circles. The younger generation of professionals has started taking it seriously, knowing it could affect the future of the business. More and more enterprising business set-ups have been proactive in assessing strategies in risk management.
If you have any other questions, on risk management or cybersecurity, let us know in the comments below.