Hardly anything is as permanent as change. It goes without saying that in the current market the ability to anticipate and respond to future changes is one of the most important parts of success.
Most entrepreneurs depend upon cold-headed faith and luck, but they aren’t adequate basis for successful strategy. There are many ways to succeed, but one of the most effective is systematic risk management.
Risk management is a management tool that makes it easier to comprehensively understand the modern, ever-changing and multi-faceted business environment. The constantly evolving, dynamic marketpalce creates new challenges to be solved. Different risks threaten the plans and goals of companies and organizations. Risk management is a systematic way of reducing business risks.
There are many ways to reduce the risks. Some of them work better than others. However, all risks aren’t the same and often it may often be difficult to distinguish between them in the midst of every day work.
Effective risk management should be extended to all aspects of the company's operations. In practice, this is easier said than done, mainly because of available tools. Surprisingly often, however, root causes can be found from the attitude of the organization.
Effective risk management question on maturity. In wrong circumstances even the most miniscule deviations and disturbances can cause a chain reaction that may threaten even the very existence of the company.
Effective risk management improves the company's ability to respond to the changes and recover from sudden economic fluctuations. The ability to recover can in many situations be the most important factor of success, as everything can not be prepared for it in advance. With the most competitive companies, comprehensive risk management aimed at reducing risks is the true basis for success. In order to really reduce and eliminate the risks, it is important that risk management is part of the everyday business and its planning.
Companies differ quite a lot in their ability to utilize risk management, but it’s introduction can significantly improve any organizations success rate.
Successful reduction of risk is a combination of know-how, company culture and mental resources, supported by appropriate services, solutions and tools. The maturity of an organization largely determines what kind of results can be achieved by reducing the risk.
We here at Granite have many years of experience with companies with varying degree of risk management maturity level. For the successful start of risk management, it is very important to ask oneself at what level their own risk management is?
Step 1 of the Granite risk management maturity level
At the first level of five-tiered risk management maturity model developed by Granite, organizations have recognized the importance of risk management for the business development. In most cases this level is achieved quite quickly. In these organizations risk management is understood as a very important part of a modern, digital business environment, especially by the people with expertise on business development. However, in the these organizations, no one hasn’t been made responsible for risk management or any concrete action to improve the risk situation hasn’t been taken. In many cases, the reluctance to take concrete action is due to the fact that the final price for inefficiency is still not fully understood or internalized.
Step 2 of the Granite risk management maturity level
When company has begun take some concrete measures to reduce risks, it’s risk management maturity can be considered to have evolved to the second level of risk maturity level. In most cases, the biggest driver for this development is either legislation or the requirements of partners.
In modern business, compliance in many areas is a competitive advantage, even though only the minimum level of requirements are met. This approach however, doesn’t produce very effective risk reduction action.
At this level, risk management tools are manual and require a lot of human resources.
Step 3 of the Granite risk management maturity level
At the third level of risk management maturity model, risk management responsibilities have been assigned for certain people in the organization. This is one of the most important steps in moving from the necessity to proactive and performance-oriented risk management work.
However, at the third level of the risk management maturity model, risk management is only carried out at as project-based or periodic intervals. This is a very natural way to bring risk management into the organization's development, but the best results may not be achieved with it.
Organizations at the third level of risk management maturity model have often introduced methods and models that are appropriate to their own operations but are not incorporated into practical business.
In most cases, organizations use Excel and their own specific forms, but the opportunities offered by this otherwise multifunctional software for risk management have begun to limit the results of risk management work. The transition to modern tools such as the Granite ERM Risk Management Service is beginning to be very timely when it comes to developing performance.
Step 4 of the Granite risk management maturity level
Organizations at the fourth step in the Risk Management Maturity Model have implemented risk management as a part of their daily operations. At this leve, risk management is supported by a clear evaluation and follow-up process.
At this level of risk management maturity, risk management work aimed at reducing risks has significant effects on achieving the organization's goals. Excels and other applied tools aren’t really applicable at this level and hinder further development.
Automated solutions, such as the Granite ERM Risk Management Service, reduce the human resources required for risk management and enable them to be targeted at the most productive targets.
Step 5 of the Granite risk management maturity level
Companies and organizations at the fifth level of risk management maturity model make use of risk management in their daily business. At this level, organizations have acquired tools and services designed for the specific task of risk management. These risk management solutions work as a support system for the core processes and strategy of the organization.
At the fifth level of the risk management maturity model, risk reduction is not a static process, but is actively optimized based on the results obtained.