Implementing Risk Management Strategies
Risk management is the process of managing risk to organizational assets, operations, or individuals (NIST SP 800-160, 2018). Risk is the main cause of uncertainty in any organization (Careersin Audiit, 2013). Risk management is very important to every organization because a lack of risk prioritization can be detrimental. Red Clay Renovations handles data from customers, and employees so any new system, software, or hardware that installed by the company carries risk. Implementing a strong risk management strategy that inspires confidence and puts subjects of risk in a constant review is beneficial to the organization. The DHS Risk Management Fundamentals book offers a wealth of guidance for risk management and its implementation.
Key Business Practices
There are three key points to implementing risk management into business practices. The first key is to take risk management seriously and deploy the selected risk management strategy with commitment (DHS, 2011). If the leadership within Red Clay Renovations supports the selected risk management strategy with full commitment then employees would be more inclined to understand and participate. The second is to have a consistent approach to decision making so that it is comparable. The strategies don’t have to be the same but should be eligible for comparison to other identified risk for prioritization. The third key is to allow the risk to be a view from an enterprise view. It is important to understand how decisions affect other functions of the organization. These three values in business practices are important to the implementation of a risk management strategy.
Operational Risk Management
Red Clay Renovations is most suitable for Operational Risk Management. With operational applications, the organization is able to better understand which scenarios are more likely to impact them (DHS, 2011). This strategy outlines the consequences, risk priority, required resources, and actions required. This type of strategy also helps to convince leadership that is responsible for the strategy to support implementation. There are three levels of operational risk management; in-depth, deliberate, and time-critical (Pearson, 2018). In-depth risk management is ideal for an organization as this identifies all forms of risk. Deliberate is used in various stages during the risk management lifecycle. Time-Critical risk management is used when there is a limited amount of time but can produce inaccurate results.
Pros and Cons of a Single Risk Management Strategy
A con to using a single risk management strategy across an enterprise is the lack of flexibility. Being able to adjust a risk management strategy to determine the risk of a certain subject is important. Having a strict risk management strategy for the company can lead to inaccurate risk identification or a misconception of the level of risk. An advantage of having a single risk management strategy is that results and findings can be easily comparable. While this method sacrifices accuracy it allows uniformity. It is much more beneficial to build suitable risk management strategies or implement a flexible system, for different sections of the organization.
In conclusion, risk management is important and the implementation of the risk management strategy is important as well. The support of leadership can influence employees, which aids in supporting the goals of the risk management strategy. Full support of the selected strategy is important to the success of the implementation to Red Clay Renovations operations. This organization is also suitable for an operational risk management strategy. The reason for this is the amount of detail this strategy provides and its flexibility. In closing, one of the most important keys to implementing risk management is to take risk management seriously and deploy the selected risk management strategy with commitment (DHS, 2011).
Careersin Audiit. (2013, August 15). The Importance of Risk Management In An Organisation. Retrieved from https://www.careersinaudit.com/article/the-importance-of-risk-management-in-an-organisation/
DHS. (2011, April). Risk Management Fundamentals. Retrieved from https://www.dhs.gov/xlibrary/assets/rma-risk-management-fundamentals.pdf
NIST SP 800-160. (2018, March 21). NIST SP 800-160. Retrieved from https://csrc.nist.gov/glossary/term/risk-management
Pearson, S. (2018, August 3). What is Operational Risk Management – Definition and Core Concepts. Retrieved from https://tallyfy.com/operational-risk-management/