In today’s volatile business landscape, a company’s reputation is one of its most valuable assets. There’s nothing like a crisis to make or break a business’s reputation, and the consequences can be far-reaching—from directly impacting share value to impacting your employer brand or leaving you at risk of legal jeopardy. Therefore, effective risk management should be regarded as one of the cornerstones for safeguarding corporate reputation and is vital for ensuring the health and well-being of your employees wherever they are.
What is Risk Management?
At its core, risk management involves identifying, assessing and preventing risks that could affect your organisation. Financial risk often takes the top priority, with much focus on market volatility, global economic fluctuations and liquidity issues. However, the practice of risk management extends far beyond this and affects every facet of an organisation’s operations.
In recent years, risks related to climate change have taken up much of the spotlight as wildfires and emergency evacuations have dominated the landscape. Increasingly, extreme weather is causing major disruption, and the cost implications of this are vast.
Survey results released last year in Healix’s Risk Radar Report indicated that extreme weather is set to overtake cyber-attacks as the top business concern by 2030, with manufacturing ranking highest as the most impacted sector already affected.
The outbreak of conflict and war has resulted in emergency evacuations, major disruption to business operations and subsequent events such as mass protests. The political sphere this year is fraught with risk as millions of eligible voters head to the polls in seven of the world’s major economies, and the use of AI in sowing misinformation and disinformation across the globe is regarded by The World Economic Forum as one of the top risks faced by the world today. ( WE Forum Global Risk Report 2024 )
Some of these risks become even more of a concern for organisations with staff engaging in work and travel across the globe. A risk management strategy will enable a quick and decisive response to a crisis, acting as a guide for employees or even preventing a crisis entirely. This response could be crucial in how your company is viewed by its stakeholders.
Key considerations for an effective risk management strategy
A range of considerations must be made to create an effective risk management policy. This begins with an assessment of the risks associated with your industry and organisation. For example, oil companies need to have risk management policies geared towards oil spills, or non-governmental organisations operating in remote or high-risk locations might need to have procedures in place to account for threats or security incidents such as kidnapping. Risk management programmes should be tailored to each organisation and aligned with broader strategic objectives. As a result, personnel can plan and manage incidents to mitigate any risk to corporate reputation.
Proper risk management considers both internal and external stakeholders. These personnel keep the business operating, such as employees, human resources, finance, marketing, and legal departments, as well as those affected by the business operations, such as government regulators, clients, dependents, and communities. One negative event can shake all of these branches and quickly undercut a company’s reputation if proper precautions are not taken ahead of time.
Lastly, and most importantly, risk management must be a sustained practice. A chosen strategy must evolve alongside the organisation, its changing priorities and operational environment. At the very least, it must survive personnel transitions to ensure long-term success.
Advice summary:
- Consider the company’s risk profile, including industry, location, size, timeframes and personnel.
- Consider the impact on both internal and external stakeholders.
- Identify and categorise the key threats and risks that may impact your organisation and personnel. Be realistic; the programme must be practical and feasible, accommodating the organisation’s capabilities and affordability.
- Designate key roles and responsibilities in the risk management process in all departments of the organisation.
