All businesses experience risk. From launching new products to protecting customer data, every business faces the threat of unexpected drawbacks. Any event that could cost your organization revenue, reputation, or sustainability needs to be identified, anticipated, and planned for ahead of time. That is where a risk management plan comes in.
As a risk management expert, Anthony Munchak understands that a comprehensive plan allows businesses to financially prepare for unanticipated events, create more efficient operations, and improve nearly every aspect of their business. Giving you a play-by-play on what risk management is, why it is essential, and how to begin implementation, he provides insight on how you and your business can remain protected. Anthony Munchak has been working in the finance industry since 1992, holds an MS degree in CFA (Chartered Financial Analyst), and has extensive portfolio construction, risk management, and full replication experience.
Definitions and Standards
Anthony Munchak defines risk management as a process in which a business identifies, assesses, and treats risks that could potentially affect their business operations. These risks and threats can stem from a variety of sources, including financial uncertainty, legal liabilities, strategic management errors, accidents and natural disasters. He states that a thorough risk management plan should be able to answer the following questions: What can go wrong? How will it impact the organization? What can be done/what steps can be taken preventatively? If something happens, is the organization able to pay for it? A risk management plan allows an organization to remain agile, flexible, and prepared for anything.
How do you know if your risk management plan is effective? Anthony Munchak explains that risk management standards have been developed by several organizations, including the National Institute of Standards and Technology (NIST) and the International Organization for Standardization (ISO). According to the ISO website, the ISO 31000 was created to: "increase the likelihood of achieving objectives, improve the identification of opportunities and threats, and effectively allocate and use resources for risk treatment.” The ISO develops and publishes international standards to be adhered to. While the benefits of developing an in-depth risk management plan are numerous, Anthony Munchak has identified the top five reasons to get started today.
Helps You Identify Risk
Being able to mitigate risk requires one to identify possible sources. If you do not know what your weaknesses and threats are, you cannot anticipate and manage them. Anthony Munchak explains that a risk management plan helps you recognize risk, allowing you to formulate a plan that lessens the negative impact. There are four main types of risk identified by the Huffington Post: market risk, credit risk, operational risk, and reputational risk. These risks have the potential to make or break your business, so simply being aware of them can impact your business trajectory.
Saves You Money
An effective risk management plan can save your business money. Risk management will assess the likelihood of a workplace accident, incident, or breach. Safety audits and inspections can help your business identify whether work processes, signage, or training need to be improved upon prior to an incident occurring. Working directly with a risk management consultant can also reduce the likelihood of fines, lawsuits, and penalties from non-compliance issues. It is almost always cheaper to invest in these precautions upfront rather than pay for them later.
Strengthens Your Brand Image
Workplace incidents, data breaches, and other PR issues can have a detrimental impact on a company’s publicity and brand image. Anthony Munchak explains that when your company creates a risk management plan, it sends a positive message to stakeholders and the broader community that you take your business seriously. There are dozens of added benefits, including employees feeling confident that they are working for a safe and responsible company, and stakeholders trusting that you hold yourself to a high standard.
When a business engages in a risk management assessment, they may discover multiple operational inefficiencies. Anthony Munchak has seen this multiple times with his clients. Building a risk management plan can have the unexpected benefit of improving the overall structure of how an organization is run, increasing overall productivity.
Improves Long-Term Agility
A company’s initial business plan likely included a SWOT (strengths, weaknesses, opportunities, threats) analysis. However, most companies do not actively re-evaluate this assessment, which means they cannot actively anticipate new threats and weaknesses as they arise. According to Anthony Munchak, a risk management plan is not static and needs to be continually re-evaluated as the industry or landscape changes, as new technologies are adopted, and as new services are offered. Working with a risk management consultant allows you to do just that.
If you have yet to implement a risk management plan, it is never too late. Anthony Munchak explains that he has worked with companies who have been operating for over a decade without a risk management plan and that the business's overall revenue, company morale, and brand image benefitted the minute they implemented one. Unsure of where to start? Get in touch with a risk management consultant like Anthony Munchak to conduct an assessment to address risk, save money, strengthen your brand image, improve efficiency, and long-term agility.