We learn more when we make a mistake than when we get something right. For this reason, we can learn just as much about a topic by reading about mistakes as we can from hearing success stories. So with this in mind, in the hopes of learning a little more about risk management, let’s look at 5 common mistakes made in implementing risk management.
No Overall Risk Management Strategy
Micro-managing your risks may work in the short-term, but with no overall strategy, your risk management is lacking direction. This direction helps keep your risk management on track and sets a precedent for how future risks are dealt with.
Short Term Risk Management Review
It’s very common for businesses to get caught up in the identifying, evaluating and strategizing of risk management that they run out of steam and forget the assessment element of the process. Once a strategy has been in practice for a period of time, this is the right time to really assess just how effective it is. Neglect this step, and small issues can quickly become major problems.
Skipping Departmental Input
Each department has a role to play in effectively identifying risks throughout the company. The importance of input from throughout the company cannot be stressed enough. They possess unique insights into the operations of each aspect of business. Without their input, crucial risks can go unmanaged.
Fear of Failure
We design our risk management strategies in the hope we won’t have to deal with failure, however we can’t count it out. Failure is always an option, because as we know we stand to learn a lot from our mistakes. Being too afraid of failing means we don’t take risks and don’t try anything different.
Imbalance of Proactive and Preventative Risk Management
Risk management comes in many forms from proactive measures such as training and preventative measures like purchasing insurance. A common mistake would be to rely too much on one over the other. Finding a balance means risks are minimized through thorough employee training and the potential consequences should this fail are also lessened with the right insurance in place.
Whether we make mistakes, or someone else does – this can provide us with a lot of guidance for the future. Have you ever made a mistake in your risk management, what did it teach you?
For more information on avoiding mistakes when implementing risk management, you can ask a DDM Advisor