7 Strategies for Reducing Operational Management Risk

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StrategyDriven Risk Management Article |Operational Management|7 Strategies for Reducing Operational Management RiskDeploying an operational risk management program that does the intended job remains a challenge for many businesses today. The industrial sector and others have witnessed rapid changes that significantly altered the way businesses operate. Global commerce continues to expand and supply chains are becoming more complex. Furthermore, regulations influence every interaction, and social media provides another means for regulators and other government entities to scrutinize the businesses.

Another problem companies face today involves the funding of the operational risk management strategy consistently. Verdantix, an independent consulting firm, recently conducted a study on behalf of DuPont Sustainable Solutions. This study found that 65 percent of businesses lacked the funds for this purpose, according to the respondents. They stated it remained a barrier they were finding difficult to overcome.

This study involved 75 senior leaders spread across eight different industries and ten countries. Verdantix asked them about risk management to learn more about ORM strategies within their organization and their perception of these strategies. These interviews led to DuPont Sustainable Solutions recommending the following seven steps for anyone looking to implement an operational risk management program successfully.

Start at the Top

The leaders at the top of the organization must be fully behind the operational risk management program for it to be effective. Approximately 80 percent of businesses in the survey stated the corporate level remains accountable for risk management. The leaders need to understand the internal operational risks, as this allows them to make better decisions and direct employees to take informed risks. They need to discuss what happens when there is a breakdown in regular operational processes, systems, and people. The risks can be controlled and avoided when team members assume responsibility for identifying the risk before evaluating and addressing them. The top five operational risks are collaboration, cultural, customer, people, and technology risks.

Risk Accountability at All Levels

However, leaders serve as only part of the equation. They need to train all employees to make risk-based thinking part of everyday operations. These individuals must be held accountable when something goes wrong in the area they remain responsible for. In the survey, 38 percent of businesses reported they didn’t hold shop floor employees accountable in this area. Any person within an organization can make a risk decision. Nevertheless, this task should be reserved for the person with the authority to minimize or eliminate the identified risk before implementing any necessary controls. This is currently how the Federal Aviation Administration handles it and other businesses have followed suit.

Timely Risk Assessments

Companies must comply with new regulations as they arise, which helps to explain why risk management must always remain a top priority. However, each company must determine how often they need to conduct an audit based on their unique characteristics and operational footprint. Of the firms surveyed, 92 percent stated they carry out this assessment at least once every year. They do so to ensure their risk profile remains current and they incorporate necessary changes in a timely manner. However, this serves as only part of the process.

Every company needs to determine risk triggers. For instance, an oil rig in the Gulf of Mexico needs to be battened down when a hurricane is forecast to hit the area. They know this trigger increases the risk of damage to the rig and take steps to prevent this damage. Each company needs to determine the root cause of each risk and protect against the risk event in every way possible.

Quantifying and Prioritizing Risks

When optimizing the operational risk management program, companies must quantify each risk in terms of its probability and severity. Once this information has been gathered, they calculate the benefits and costs associated with mitigating each risk to determine if it is more costly to mitigate than to allow it to remain. These calculations allow the organization to target its efforts effectively.

Select Metrics and Key Performance Indicators

To successfully implement an operational risk management program, the company must know which metrics and key performance indicators are needed to monitor and assess performance accurately. This ensures the company is putting its efforts and resources where they are needed most. Fortunately, many companies recognize they need to make this a priority and are turning to outside sources for help in determining which metrics and key performance indicators are best for their organization.

Many business owners associate key performance indicators and metrics with general business management, accounting, and finance. However, they remain necessary in every organization, as they help with achieving specific targets. The company might identify targets related to exposure reduction, minimization, or mitigation. For instance, a business may monitor the number of transactions that have a fault or error and the number of cumulative hours the IT system is down. It all depends on the business.

Implement Controls

When a business chooses to implement control measures to mitigate risks actively, particularly those that have been determined to be a priority, they must use controls that are cost effective, consistent, and well-documented. Although 98 percent of respondents in the survey stated they have measures in place, only a quarter of the businesses believed the measures to be cost effective. This demonstrates the need for companies to look for better solutions when it comes to managing and controlling risks they have identified.

Communication

Companies must recognize operational risk management needs to be an ongoing process. Furthermore, regular communications on ORM performance serve as a requirement when it comes to effectively ensuring employees remain engaged in this area. Tailor these communications to different levels and functions across the organization, as different areas and departments have distinct priorities and areas they focus on. There is no need to share a communication meant for one department with everyone in the organization, as excessive communications lead to people tuning out, particularly when the majority of the communications don’t pertain to them. Avoid this by sharing messages with certain audiences rather than across the board.
Operational risk management differentiates competitors. Companies that make this a priority find their product performance improves, brand recognition increases, and financial results are easy to sustain. If you have yet to make this a priority in your company, do so today. You cannot afford to miss out simply because you haven’t focused on ORM enough. This needs to change today so you can stand out from competitors and increase your market share.

How Can You Protect Your Business From Any Kind Of Harm?

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StrategyDriven Risk Management Article |Protect your Business|How Can You Protect Your Business From Any Kind Of Harm?When you own a business, the most important thing is always going to be that you protect it from getting hurt in any way. There are a number of things that you can do in order to protect your business, but you have got to make sure that you are taking all of the possible precautions as joined together, that’s when they are at their strongest. If you don’t know how to protect your business, then it’s a good thing you have come across this article as this is exactly what we are going to be discussing. Keep reading down below if you would like to find out more about this topic.

Insurance

The first thing that you are going to need is insurance. When things go south, you always need to know that your business is backed up, and if it’s not, that’s when you’re going to be in a world of trouble. The thing with business insurance is that there are so many different types it can become quite hard to navigate which policies your business needs. As such, we highly recommend that you speak to a broker and see what they have to say. These professionals will ensure that your business has all the cover it needs, without going overboard and having cover that you will never use.

Don’t forget that your business is like your baby, and like your baby, you would rather pay for the best quality care. We feel like this is important to state because some businesses think that insurance is not important. We’re sure that’s not what you would be saying if you were facing days of downtime, losing plenty of potential profit.

NDA’s

Another thing that you should do is have all of your employee’s sign non-disclosure agreements. This way, they are not allowed to talk about anything pertaining to your company or the business that you conduct to anyone who doesn’t work at the business. This saves you from having any secrets of confidential information shared among your competitors. If one of your employees does slip and decide to spill the information, then you can take them to court and make sure that they answer for this.

Some people tend to think that if you ask your employees to sign one of these documents that it means you have something to hide, but it doesn’t. You simply want to protect your business from those who wish to exploit or hurt it which is exactly what you should be doing.

CCTV

It’s also important that you have CCTV if you have business premises. You don’t want people to just be able to walk in and do whatever they want, go wherever they want, and take whatever they want. This is a recipe for disaster, so we recommend that you look into the best CCTV systems on the market, and invest in one of them sooner rather than later. It’s not the waste of money that many people think it is, for the reason alone it is worth it.

The best thing about CCTV is that it acts as a deterrent for anyone who is looking to break into your business. Most people don’t want to risk getting caught as what they are looking for is not that important to them, at least not enough to risk going to jail for it. Hire an expert company to ensure that everything is fitted properly as this is the best way to be sure that you are getting full coverage.

Online Security

Next, you should think about taking the right steps with your online security. It’s fair to say that issues online have become more common for companies in recent years. One of the ways that you can handle this is by taking significant steps to boost your online business security model. This can be as simple as investing in the right cyber-security software. It’s worth noting that anti-virus software is often enough to put a roadblock in front of most hack attempts. If you are worried about issues here, then it could be worth thinking about investing in IT support as well. With an IT support solution, you will have experts on hand who are going to check for any issues that could be occurring behind the scenes.

Of course, if you are running a larger business, then the best way to handle issues with security is to make sure that you are investing in training. Often, an employee will be the reason your online security falls short because they are hit by a phishing scam. If you teach them the danger, they can recognize the signs that they are being targeted.

Get Your Affairs In Order

The final thing that you should do is get your affairs in order. If something goes wrong, then you want to know that the business is taken care of as much as possible, as well as your employees yourself where possible. For example, the same way that you would sort wills, trusts, and estates in your personal life, you should be doing something extremely similar with your business.

Speak to a lawyer and make sure that everything is in order, signed, and taken care of. You want to be sure that you are not leaving your business in the lurch if something goes wrong that can’t be sorted through insurance or any other means. At the very least, you need to be sure that the people who work for you are taken care of.

We hope that you have found this article helpful, and now see some of the things that you can do to protect your business from any kind of harm. It’s essential that you are always taking things with your business as seriously as possible, and taking precautions to ensure that it is safe is one of the most important. The last thing that you are going to want is someone exploiting your business, so make sure that you take these precautions to save yourself the future hassle!

3 Ways to Protect Your Business From External Threats

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StrategyDriven Risk Management Article |Protect Your Business|3 Ways to Protect Your Business From External ThreatsRunning a business requires you to pour your heart and soul into making it a success. When you commit so much time and energy to your business, the last thing you want is for its success to be jeopardized by an external threat. External threats to companies come in many forms, so being aware of them and what you can do to protect your company is essential.

Knowing that you are protecting your business will bring you peace of mind and allow you to focus attention on running your business. Here is how to keep your business protected:

1. Increase Business Premises Security

A break-in or theft at your building can be a distressing situation. No one wants the hassle and upset of needing to report the crime and clear up the damage caused, especially when this is likely to cost you both time and money that could be better spent elsewhere.

Increasing your physical security measures at your business can act as a helpful deterrent and prevent crimes from being committed. Increasing your number of CCTV cameras on the premises, installing shutters, and investing in an alarm system will help reduce the likelihood of crimes being committed and save you the time and hassle that this causes.

2. Take Care of Cybersecurity

While the physical security of your buildings is vital, protecting your business from cybersecurity threats is also crucial. Cybercrimes are continuing to rise, with increased numbers of hacks and phishing scams taking place. If your business is a victim of a cybercrime, the cost can be high. Data breaches and other cybercrime can cause your business unplanned downtime, damage to your reputation, and money if you receive a fine.

As cybercriminals become increasingly sophisticated in their techniques, it becomes even more essential to work on protecting your business from cyber threats. Using Managed IT Services is an excellent way to do this as it enables you to benefit from professional assistance and the latest cybersecurity knowledge to protect your company. Knowing that you have expert help just a phone call away is a fantastic way to keep your business protected from this genuine threat.

3. Legal Protection

No matter how efficiently and diligently you run your business, you cannot control issues caused by other organizations. There are many issues your company can fall victim to in its business dealings, so ensuring you have legal protection against these is crucial.

Finding an experienced lawyer with lots of experience in drawing up contracts and copyright law is vital for your business. Getting contracts drawn up between your company and your suppliers could help safeguard your business against the cost of delays caused by supplies being delivered late or being substandard. It is also helpful to ensure you have applied for the appropriate copyright and patents for your designs and ideas so that you can take action if a competitor copies these.

While external threats cannot be eliminated, taking action to minimize their risk is the best way to keep your company protected.

Why Insurance Is Vital For Your Business

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StrategyDriven Risk Management Article |Business Insurance|Why Insurance Is Vital For Your BusinessBusiness insurance is financial coverage for your business. It provides you with protection against both potential and unexpected damage. There are different types of insurance for businesses, from insurance on equipment, structure, loss of revenue, cyber insurance and many more. A business owner is exposed to various risks – from loss of equipment and information due to fire or burglary, damage to electronic equipment to possible third party claims, for example claims of injured employees or even claims filed due to professional negligence. Each business has its own unique characteristics, its specific insurance needs and of course the budget available to it. Therefore, the insurance policies must be adapted to the type of business and its activity, in order for you to receive business insurance that gives you exactly the coverage you wanted. There are different types of insurance, including tradesman insurance for example.

I own a home-based business. When do I need business insurance?

There are many freelancers, including lawyers, accountants and the like, who own and operate a small firm from within their own home. In this case, too, it is advisable to draw up an office insurance policy. If the home office is uninsured, not only is it not protected from the risks mentioned above, but the office activity may completely void the home insurance policy (if any). If a business is conducted at home, the apartment policy must be updated and it must be stated that there is a business activity happening inside it. If the business activity in the home is not updated, the insurance benefits may be affected in the event of damage or a claim.

What policies are needed?

Insurance of shops and businesses. Store insurance or any other business requires a unique and customized business insurance policy. First and foremost, the policy covers the business from fire damage and can be extended to many additional coverages as needed, such as flooding, theft and more. The common covers can be divided into three parts:

  1. Structure – can be extended to cover against natural damage and earthquake etc.
  2. Inventory and / or equipment – can be extended for protection against burglary, natural damage, damage to goods during transfer, loss of profits and more.
  3. Liability (liability insurance) – Common coverages are third party damage (spread of fire to nearby businesses or customer injury), employer liability (insurance that protects the business owner from claims by his employees), product liability, professional liability and more. In general, the field of liabilities is a relatively complex field, and it usually covers the risks that can cost a lot of money to the insured.

Professional liability insurance is intended for employees in a variety of areas of expertise, including doctors, paramedical therapists, architects, plumbers, lifeguards, beauticians and the like. This insurance provides coverage for the professional responsibility of the professional when performing his work. Thus, if the professional is sued by a client due to professional negligence, whether for bodily injury or property damage, this professional liability insurance provides financial coverage, in accordance with the limits of liability purchased in the policy including ancillary expenses. Professional liability insurance is an important business insurance because it covers the long-term professional and protects them from future claims, even those that were filed many years after the insured event occurred and it’s better to be safe than sorry!

4 Benefits of Server Monitoring: How Involved in Every Aspect of Your Business Can You Afford to Be?

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StrategyDriven Risk Management Article |Server Monitoring|4 Benefits of Server Monitoring: How Involved in Every Aspect of Your Business Can You Afford to Be?When business owners first open up their doors, either literally or proverbially, they often manage most or all aspects of the company’s operations. As the business grows, though, things get complicated fast and business owners need to be more judicious with their time. They need to focus on those functions that serve to generate the most income or require the most specialized expertise.

Unfortunately, growing businesses can’t usually afford to hire additional employees to manage other important aspects of keeping things running smoothly. It costs a lot of money to hire a full IT staff capable of performing server and network performance monitoring, but without any kind of server monitoring, growing businesses will be at an ever-increasing risk of experiencing costly network failures. Thankfully, there’s a better option. Read on to find out about four of the biggest benefits of using remote server monitoring as a means of mitigating costly risks without spending a fortune on hiring or expanding a full IT department.

1. Identify Issues Before They Come Up

It’s amazing how quickly a seemingly minor server issue can become a major headache for business owners. Using a Server Monitoring tool makes it easier to detect small problems before they become huge headaches. Remote server monitoring allows business owners to keep track of things like backups and updates and detects irregularities and server failures. Some well-designed monitoring tools can even correct common errors automatically, helping to prevent more serious issues from developing.

2. Get Advanced Warning for Hardware Upgrades

Remote server monitoring can’t eliminate 100% of network maintenance tasks from business owners’ plates. A remote monitoring tool can’t perform necessary hardware upgrades, and eventually, all hardware will need to be replaced. It will, however, offer an advanced warning to business owners so they can plan for a seamless server switchover and eliminate unplanned downtime. A remote monitoring program will let the user know when processor usage is rising to dangerous levels or hard disk space is running low, letting business owners know that it’s time for an upgrade.

3. Improved Security

One of the biggest advantages of remote server monitoring is that it improves security dramatically, especially for companies that don’t have in-house IT departments. The monitoring tool will keep track of everything happening to the system’s firewall, install security patches immediately when they come out, reduce spam relay attempts, and free up server capacity. The happy results of these steps are lower chances of being targeted by hackers looking for an easy mark and reduced downtime due to security breaches, which translates into less stress for business owners and happier customers or clients.

4. Increased Productivity

Already have an in-house IT department and am wondering if remote server monitoring is worth the investment? It is. The IT professionals already on the staff will no longer have to deal with simple fixes that could be managed remotely, nor will they be faced with crisis-level situations that arise as a result of lapses in server monitoring. The automated program will simply alert the IT staff when there’s something that needs to be dealt with in person.

The Bottom Line

Growing a business is hard, but business owners don’t need to go it alone. They can rely on effective, affordable tools like remote server monitoring programs to shoulder some of the burdens.