Efficient enterprise risk management is of growing importance in today’s regulatory environment. Rating agencies and regulators have been expecting that companies have a good understanding of their risk profiles and implement appropriate governance structures to juggle the risks.
The insurance market is ever-changing, and it could be challenging for an organization to have a thorough understanding of the various risks that can cause potential pitfalls in the organization.
Conducting a risk assessment for a company allows an organization to take a holistic look at the risks, allowing the management to identify these threats and stock up on the opportunities.
With a proper risk assessment process, companies will be able to identify and get ready for potential risks to avoid the catastrophic consequences down the road and keep their workforce safe.
What is Risk Assessment?
Risk assessment is all about identifying potential hazards that can affect an organization’s capability to conduct business properly. The risk assessment processes can help identify inherent business risks and suggest measures, processes, and controls diminishing the impact of these risks on the business operations.
Organizations can apply a Risk Assessment Framework (RAF) to prioritize and avail the details of the assessment, following up with any risks to the information technology infrastructure.
This framework assists an organization to identify potential hazards and the business assets being put at risk by these hazards. The framework also calls out potential fallouts if these risks come to fruition.
How do we conduct a Proper Risk Assessment Process?
Before we begin with the risk assessment process, it is important to draw out the scope of assessment, involved stakeholders, essential resources, and the laws and regulations that you will have to follow up with. After that, you may proceed with the following steps:
Identify the Potential Risks:
The very first step to creating an efficient risk assessment plan is to determine the hazards that you and your workforce might face, including the following:
1. Natural disasters
2. Biological perils
3. Workplace mishaps
4. Intentional acts
5. Technological pitfalls
6. Chemical hazards
7. Mental pressure
8. Supply chain interruptions
Pick out some time to look around your workplace and see what activities or practices could potentially harm your company. Try to cater to all the aspects of work, including the remote workers, non-routine activities, repair, maintenance, etc. you may also study the accidental reports to determine the hazards that have impacted your company in the past.
Determine What May or May Not Get Harmed
It is essential to have a thorough study of how the damage will harm your employees and how much they will get harmed by the same. As you look around the organization, try to put yourself in your employees’ shoes. Think about how your personnel can be harmed by internal or external factors. For every hazard you point out in step one, contemplate who will be harmed if the hazard occurs.
Evaluate the Risks and Take Appropriate Precautions
Now that you have a list of potential hazards drawn out, the next step is to consider the probability of the dangers occurring and how severe the consequences will be. This risk evaluation will help you govern the priorities of your hazards and where to reduce the level of risks.
Keep a Record of Your Findings
If your office has more than five employees, you are required by law to layout your risk assessment process. Your plan must include the hazards you’ve found, the people getting affected, and how you plan to mitigate them. The record should show that you:
- Determine who would be affected
- Dealt and controlled obvious hazards
- Conducted a thorough check of your workspace
- Kept the staff involved in the process
- Initiated precautions to keep the level of risks low
Review Your Assessment and Update It If Necessary
Your workplace is constantly changing, and so are the risks to your organization. As the new people, equipment, processes, and regulations are introduced, each brings in the risk of a new hazard.
Keep reviewing and updating your risk assessment process to stay on top of new hazards.
How Can We Help?
Under-Controls Management System is a website/app that enables organizations to manage regulatory prerequisites mandated in management systems. It also guides and advises businesses on the right risk assessment strategies and decisions. So, if you need more of such information and tips — contact us right away!