Risk is a constant reality for any business. No matter the industry or the size of the company, there will always be potential threats lurking around every corner. Building up a comprehensive framework that can be used to identify and prepare for any risks your business may face is an incredibly effective tactic. This is where a Risk Management Framework (RMF) comes in. If you want to be assured that you’ve given your business the best safety net possible to prepare for the future, you should consider going through the RMF process before an inevitable crisis catches you off guard.
This blog is a guide to Risk Management Framework, and will outline the five parts of the risk management process while breaking down how RMF protects a business from risks. If you’re in need of effective risk management services, contact Resilient Services today for some personalised advice.
What is Risk Management Framework (RMF)?
Risk management is the process of identifying, assessing, and controlling any threats that could have a negative impact on a business. RMF involves constructing cohesive plans in order to confront and mitigate risks before they pose a more serious threat to your organisation. Adopting an RMF ensures that all necessary safety procedures and preventative measures are laid out before you need them, leaving your business in the safest position possible for long-term success.
- Risk Identification
The first step to building an effective Risk Management Framework is to identify and define the risks that your business may face. Begin with broader risks, considering absolutely everything that may be thrown your way in the future. This may include external threats, IT disruptions, operational failures, legal issues, building emergencies, staff shortages, on-site accidents or strategic risks.
From there, you can begin to whittle down the list and shift the focus onto a smaller portion of the risks. What risks are more likely to cause long-term problems? Which have a quick fix? What are you more likely to encounter? What can be more easily prepared for? Categorise the risks into core and non-core risks – the risks the company must face for long-term growth and success, and those which can be mitigated or avoided completely.
- Risk Assessment
The risk assessment process involves measuring all of the risks identified and gathering information and data about the size and probability of any potential losses that the organisation may face. Assessing the overall effect that a risk could have on a business is vital, both in terms of assessing both potential profits and losses. Where there are significant benefits or not, a good RMF thoroughly measures out all possible outcomes of exposure to this risk, providing a clear look at what can be mitigated effectively.
- Risk Mitigation
With all risks identified, categorised, and measured, your business can then decide which threats can be minimised or altogether eliminated by implementing certain measures. Risk mitigation can look completely different depending on the business and kind of threat, but can involve implementing new safety procedures, sales of assets or liabilities, buying insurance or budgeting for certain crises.
- Risk Monitoring
Applying mitigation techniques to risks does not necessary mean that the job is done. An effective RMF involves consistent monitoring of these risk measures to ensure that the ideal threat level is maintained. Routine risk reports, financial assessments and check-ins with key personnel will ensure that nothing slips through the cracks, and that your business’s safety level is optimal.
- Risk Governance
Risk governance refers to ensuring that all company employees and personnel complete all their tasks in total accordance with the Risk Management Framework. Risk governance requires that each staff member’s role is clearly defined, with each having clearly identified duties relating to risk prevention measures. Authority, segregation of duties and overall surveillance all need to be structured in a clear system that must be clearly followed.
Enquire Today for a Risk Management Plan
Don’t wait around for the worst-case scenario to strike your business when it is unprepared. Failing to prepare is preparing to fail. In order to protect your business’ profitability and longevity, an effective Risk Management Framework is a vital safety net. Knowing where to start can be difficult but, working with Resilient Services ensures that your organisation will be supported by a team of specialised experts through the entire RMF process.