Build a Risk Management Culture
In the past, risk management for a business often meant purchasing appropriate insurance coverage. In today’s complex business world, establishing and maintaining a corporate culture that creates a safe and secure environment for employees, customers and data is key to risk management. It means minimizing risk whenever possible and helping all employees identify risk before something bad happens and respond appropriately if it does.
Not all risks can be controlled — weather is a good example — but you have an opportunity to promote a risk management culture that incorporates:
- Worker safety — Evaluate slip and fall potential, put proper guards on machinery and more.
- Public safety — Ensure quality control through product packaging, properly limit access to hazardous areas, etc.
- Data safety — Protect against cyberattacks such as those on SONY Pictures, Home Depot, Anthem Inc., Target Corp. and the federal government.
Creating a foundation for risk management culture requires commitment, communication, behavior reinforcement and measurement, and it starts at the top. Executives must clearly articulate a commitment to risk management to the entire enterprise. Managing risk should be a consideration in all major decisions.
These steps can help:
- Begin by assessing the current risk profile of your business. Your insurance broker may be able to help with an assessment, recommendations and setting benchmarks that will help you measure improvement.
- Communicate with employees so they understand the importance of risk management. Also provide them with actionable information.
- In situations where employees need to modify their behavior, figure out what types of incentives will be effective in producing the change. Consider assessing employee commitment to risk management in performance reviews.
- Measure your results. You can use metrics such as accidents, injuries, claims and whether insurance premiums rise or fall. But you may also want to track more subjective measures such as culture surveys that can provide a peek into employee mindsets.
Risk management today requires more than appropriate insurance coverage; you must position the entire team to safeguard the best interests of the business.