Your Risk Management Policy must be Documented
For a risk management policy to be active and followed by company personnel it must be properly documented and approved by the management of the business. Once it has been written and approved, it must also be implemented. This will require some training so the key individuals that must utilize this procedure are fully aware of its contents.
Within a risk management policy there should be many necessary items that will thourghly explain what is to be done and when it should be conducted. The more complete the procedure is, the better chance of it being implemented as it was intended.
Included in every risk management policy there has to be a procedure in which the risks are identified. Within the different industries there are known risks of doing business. The particular ones that are associated with each business must be properly identified and listed.
Once the risks are identified the risk management policy should explain how the risks will an analyzed for their impact on the business. As part of this analysis, there should also include the probability of the risk impacting the business. Just because there is a known risk out there, does not mean it will impact the company.
Then the risk management policy should have a procedure for evaluating all the pertinent information so the risks can be properly prioritized. Having an order in which the risk should be addressed is important to mitigating their impact on the business.
The mitigation part of a risk management policy is fundamental to how the risks are to be addressed. There are multiple ways this can be done. Along with mitigating the risks there should be the consideration of the financial input the reduction of the risk is as compared to just letting it impact the business. In some cases it is less expensive to just live with the impact of certain risks.
These different procedures should be a part of every risk management policy that is approved by a company. Each of these policies are custom fitted to be business, but the basics must be present for it to be an effective policy.