Businesses work with risk and work to mitigate risk every day. There are widespread news stories when big-name companies fail to mitigate risks. For example, we have all heard about cybercrime completely halting big-name companies with disastrous effects. Previous to that, we heard about companies who had to close their doors for good because of the pandemic.
When you read stories about businesses suffering enormous losses, it likely makes you want to immediately buy an insurance policy, better software, or some other product that will make you feel more secure. Instead of purchasing something and hoping for the best, what if you set up a tested system to avoid severe risk and cut down on losses?
How to Use Business Systems to Mitigate Risk
As you consider risks that your company may face, we encourage you to go through the following steps to reduce risk and avoid losses.
Before addressing a risk, consider how likely it is actually to happen. While risk assessment may not serve you perfectly (after all, few business owners predicted a global pandemic), understanding which risks you face commonly versus what you are worried might happen can help you make the right choice for your business.
2. Create a company policy
Most risks can be addressed internally by hiring qualified employees, establishing common sense company policies, and training employees.
Once you have assessed the risks that seem most likely, the first step is to make a company policy to address them. Now, you may think writing a company policy to address a risk is enough. But it is not. Employees need to understand the logic behind your policies. Explain the danger and describe why this policy needs to be put in place. Ask your employee to envision a future in which the risk is not averted. Would the company shut down? Would employee or customer safety be threatened? Get the employee to stand in your shoes for a moment so that they understand why this policy is in place.
3. Set up a system to ensure the policy is put in action
Creating a policy is not enough. You must create systems of prevention to ensure that a risk is mitigated.
For example, if you have a fleet and your employees must drive vehicles to do their work, there are risks of accidents, damage, and injury. Putting in a policy that says, “You must be a good driver to work here” will not cut it. Your HR team will have to create systems around interviewing candidates to ensure they have a clean driving record. Your employees need to follow procedures to make sure the vehicles in your fleet are properly maintained and safe to drive. You may also implement systems to ensure that new employees are monitored and trained on specialized vehicles or equipment properly.
Creating systems now will mitigate the risk later.
4. Provide training
Writing company policies and building business systems and checklists are vital steps. But training on these systems is where the rubber meets the road. The best way to ensure all of these systems you’ve spent time creating are implemented is by training staff on how to implement them.
Run your employees through the systems, encourage them to find bugs that need correction, discuss how you can improve the systems. Engaging your employees as a team allows them to own the system and encourages them to use it.
5. Test the system to ensure it is in place
Security software consultants do this all the time. They send employees dummy phishing emails to see who will still click on the link provided. Why not set up tests for any policy that you put into place to ensure the systems are working?
6. Retrain employees as needed
One employee training session is not going to be enough if a system isn’t commonly used. If you tested in step five above and found that the system is not always used, retrain employees to ensure they know what they need to do, when.
7. Ensure new employees are trained on the system.
Part of implementing a new system is to ensure that HR is on board with training new employees. Make sure that training is part of your onboarding process so that new employees come in with the knowledge they need to mitigate risk at your business.
8. Finally, show that you are invested in this risk mitigation strategy.
Your employees need to see that leadership is serious about a new policy, strategy, or system. If they don’t see it, the policy won’t become part of the company culture, and it will be challenging to gain compliance. Instead of fighting to get something implemented, show you are serious by taking the training, participating in the dummy runs, and committing to ensuring policies are implemented.
Are you committed to mitigating risks in your company? Get in touch! We work with businesses worldwide to build and implement processes and procedures that help reduce risk, create consistency, and provide growth opportunities.