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A Risk Plan to Guide your Business Through Rough Waters

August 16 2010

For a business to be successful, a risk plan must be in place to deal with the issues that have a negative impact on a company. This is an essential tool that is used by successful project and business managers to avoid the pitfalls that are inherent to running a company.

The first part of every risk plan is a system to establish a procedure for identifying the many risks that are associated with the business operations that are being undertaken. In all aspects of business, there are inherent risks that are well known. These are easy to identify. The ones that could occur randomly are the hardest ones to spot and identify.

Once the risks have been indentified, the risk plan needs to have a procedure for assessing their impact on the business and the probability of this occurring. Most managers look at the impact potential with a great deal of interest. This is because those risks with the greatest impact on a business will affect the normal business operations of the company.

If the impact is negative, it could cost the company business and income. If the impact is not necessarily negative, it could still cause a disruption in the normal daily activity at the company, which could hinder the performance of the work force. Either way, the impact should be assessed and dealt with correctly. For this reason, an assessment procedure should be included in every risk plan.

By judging the probability of a risk encounter, the business and its impact on the business is the way to prioritize the risks. This part of the risk plan needs to be well thought out and implemented. This way, time is not spent on risks that will affect the business in a small way, while a major risk is left unimpeded.

Just having a risk plan is not enough. It must be implemented and used for it to be effective. With all the proper components in place, the negative effects of any risk can be mitigated and the impact can be greatly reduced.