Every organisation faces risk. In many sectors, doing business involves the acceptance – and management – of some level of risk with potential consequences ranging from low-impact to severe.
In this article, Cited explores some of the impacts of workforce-related risks facing organisations, how they can be managed, and the role of international standards in risk mitigation.
Risk appetites and the impact of risks facing organisations
EY defines an organisation’s risk appetite as “the amount of risk you are willing to take in pursuit of your strategic objectives”. Risk is highly contextual depending on your sector and industry: for example, while a financial services provider may have to manage people-related risks such as theft, fraud, and cybersecurity; a mining organisation must manage complex environmental, social, and health and safety risks in order to continue operating.
Impacts of risk factors include the following:
Business interruption: Business interruption occurs when production comes to a halt due to operational interruptions, crises, and disasters.
Health and safety risk: The possibility of injury, illness, or death stemming from exposure to a hazard in the workplace.
Supply chain risk: Disruptions to information, materials or services from critical suppliers can lead to business interruption.
Financial risk: Loss of income from business interruption or liability issues that could affect cashflow and leave the organisation unable to meet its obligations.
Reputational risk: Brand damage stemming from the action of the organisation, its employees, or third parties such as suppliers. Reputational damage can lead to lost revenue and customer attrition.
Compliance risk: Regulatory breaches can put employee health and safety at risk, as well as leading to the risk of associated fines and impacting an organisation’s licence to operate.
Cybersecurity risk: Loss resulting from a data breach or cyberattack on your organisation, such as hacking, ransomware, malware, or insider threat.
How to manage risk
In most cases it is impossible to eliminate or avoid risk entirely. Instead, organisations use risk management strategies to reduce the likelihood of a risk event occurring and mitigate impacts when they happen.
A typical risk-management process involves the following five steps:
- Identify potential risks: Using a process including brainstorming, internal and external research, stakeholder interviews, SWOT analysis and more, identifying as many potential risks to an organisation as possible.
- Analyse the likelihood and impact of each risk: This stage involves understanding the probability of an event occurring and its consequences.
- Rank risks: Make a list of the top risks according to your organisation’s context and priorities. This will help in the allocation of resources for managing the risk.
- Manage risk: Treat the risk through a combination of policies, compliance management, technology, and training to reduce the likelihood of an event occurring.
- Monitor results and adjust: Drive continuous improvement by monitoring the success of risk management strategies and taking action accordingly.
International standards and risk mitigation
How do ISO standards fit in with an organisation’s risk management strategy?
The key standard to be aware of is ISO 31000 (Risk Management). This internationally recognised benchmark provides principles, a framework, and a process for managing risk for organisations of every size. It includes tips for improving the identification of risks (step 1 above), and how to allocate and use resources for treating risks (step 4). ISO 31000 is not a certification in itself but provides guidance for internal and external audit programs.
ISO 37301 (Compliance Management Systems) provides requirements and guidelines for “establishing, developing, implementing, evaluating, maintaining and improving an effective compliance management system within an organisation”. The standard recommends implementing compliance across the entire organisation from operational requirements and health and safety management to financial, risk, quality, and environmental processes. Benefits of using this standard include a reduced risk of fines due to non-compliance, along with reputational and credibility improvements.
ISO 31000 and 37301 are not the only standards that can help in terms of risk management and mitigation. Dozens of relevant standards exist for areas including information security, anti-bribery, quality management, and health and safety. All of these standards demonstrate internationally recognised best practices for business and provide guidance on managing specific rather than general risks.
Reduce compliance risk with Cited
Managing regulatory compliance isn’t just about avoiding fines. It leads to the reduction of risks of every type including health and safety, financial, reputational and business continuity.
While risk management processes and ISO standards provide useful frameworks and guidance, it takes a powerful compliance management system to generate results. The Cited compliance array is your single solution to ensuring your workforce is 100% compliant, 100% of the time. The system can be easily tailored by the user to monitor every type of compliance element, and can be used across multiple sites, workforces and industries.