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Risk Management Alone Isn't Enough
Wednesday, 27 June 2012 09:37

Traditional risk management falls short of what's needed to make your company truly resilient. Most organisations run a risk management system of one sort or another; that is to say they try to manage their exposure to risk by reducing the effect of uncertainty on outcomes.

Typically organisations will identify their risks, assess them for scope and proximity before evaluating these risks and then implementing risk treatments. The purpose of this approach is to both understand the risks and try to reduce the chances of them becoming an issue. But there are shortcomings with this approach if used on its own.

Firstly, the risks are evaluated and priortised in relation to what? Most organisations don't have a shared set of criteria for evaluating the impact of the risks so the impacts are subjectively assessed, often using the "best guess" method. This results in an often inaccurate and distorted risk landscape. Secondly, typical risk management stops short of addressing how impacts are dealt with when a risk becomes an issue or creates a disruption; what then?

So risk management alone isn't enough; to be truly resilient, a robust approach to risk management is combined with Business Continuity Management. In this way risks are linked to the organisation's strategic objectives through its most critical activities and resources. Impact criteria are specified accordingly and all risks are measured according to these criteria to provide an objective view of what's really (and strategically) important. Finally BCM picks up where traditional approaches stop; BCM plans for dealing with the impact of a risk when it becomes an issue or creates disruption. BCM also established how best to recover from the disruption and allocates priorities in this regard - this is only sensible as Murphy's Law decrees that disruption is almost inevitable at some stage.

So the most resilient organisation will use a combination of sound risk management and business continuity; each is reliant on the other to be truly effective. Risk management alone isn't enough.

EPS Client's Testimonials

Gaining Business Continuity certification is commercially important to us as it enhances our competitiveness. EPS was fundamental to our success in becoming the first construction company in Ireland to be certified to the British Standard.

Julie O'Hagan
Director, Dixons Contractors

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