One of the reasons why SMEs may not latch on quickly to Risk Management (RM), is probably because when they consider the requirements and standards they need to align with and the seemingly complex structures they might have to create in their businesses, they just do not measure up.
However, it is important to keep in mind that the primary objective of RM is to create and protect value (ISO 31000:2018 Risk Management – Principles). So, if complex structures get in the way of creating (or protecting) value, then it has not been implemented correctly. SMEs can maximize the benefits of RM by focusing on the key value drivers in their business, and applying RM first in those areas, and then progressively from process level to enterprise-wide. To further simplify this, consider the steps below:
- State your business objectives – What are your Business Objectives?
- Identify your key functions and processes – What is your key (current focus to achieve set objectives) business process?
- Identify key activities in the process (drill down from processes to activities) – What are the sub-processes of the key functions identified?
- Tinker on the issues you may encounter with these processes (activities) that may hinder the achievement of your goals in step 1 above and document them. (Risk Identification)
- How can you prevent these issues from occurring or reduce the impact, if the occurrence were unavoidable? (Risk Mitigation).
Figure 1.1: Illustration of a Sample Documentations for a Clothing brand
To maximise value from RM, a business’ RM function and activities must be focused on objectives as well as relative to the size of the organisation and relevant to its processes and capabilities.
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Damilola Fene-Osakwe is a trained Economist & a practicing Risk Management Professional. Her work experience spans across top multinationals in West Africa, in Strategy, Consulting and Risk Management functions. She is also a fashion entrepreneur and runs a female clothing ready-to wear line (Salt by Damadel) with a purpose to empower women in business to becoming leading women. Damilola is married and blessed with two lovely kids.