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What are some common risk management errors?
Home » Human Resources » Risk Management » What are some common risk management errors?Risk management is dangerous territory. Poor analysis of, or response to, risks can cause your company to be blindsided and suffer extensive damages. Try to avoid this scenario by avoiding these three common risk management errors:
Prioritizing the wrong risks: Jeanette Winterson said, "What you risk reveals what you value," so make sure your company is valuing the right things. Don't risk safety, for example, for the sake of profits. In addition, however, don't waste your time on risks that have a miniscule chance of occurring, but focus where you're most likely to face losses.
Failure to monitor risks, before and after: Don't ignore a risk that is months or years away; monitor the situation and consider risk management strategies that you can implement them well in advance. In addition, after you have made a risky decision, monitor the outcome. Did the risk really occur? What did the risk and the risk management decision cost your company? How successful was your strategy? Try to quantify these results in some way.
Paralyzed by the fear of risk: Not all risks need to be avoided. General George Patton said that calculated risks are "quite different from being rash." If the potential success is enormous and there's only a small risk, go for it. You may very well energize your employees and make substantial gains for your company.
You may be able to avoid specific risks, but you cannot avoid the presence of risk. Quality risk management skills will recognize and respond appropriately to the reality of risk.
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