Every business model and operation comes with some level of risk—some much more than others. Any time you embark on a new business venture, the possibility of risk is inevitable. It’s how you plan for and manage potential risks that determine the overall success of your business. In fact, risk management in business process management (BPM) is paramount to keeping costs down, protecting your bottom line, maintaining a good reputation in your industry, and improving the overall operational efficiency as your business grows.
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What Is Risk Identification?
Essentially, risk identification is an opportunity for you to take a step back and truly assess your business to identify potential problem areas that you should be aware of or that can be improved upon to prevent future losses.
As mentioned, every business faces some level of risk. But the types of risks that could affect an organization’s efficiency and profitability differ depending on the nature of the business and other extenuating factors or circumstances. For instance, if your business is launching a program that is affiliated with a specific political party or ideology, you run the risk of alienating customers who don’t share the same ideology as you, especially if it involves a controversial or heavily debated subject.
Other potential risks are related to your brand reputation, in which case you’d be responsible for ensuring all your staff receive the proper training and resources so that they can effectively represent your brand. That includes ensuring all customer queries are responded to in a timely manner, all communication is conducted in a polite and diplomatic manner that reflects your brand values, and so forth.
At the end of the day, it’s up to you as the business owner to determine what protocols and standards apply to your business and how strongly they need to be enforced. This is all part of coming up with a feasible business plan that includes risk identification, assessment, preparation, and prevention of losses.
The cornerstone of an effective risk identification and management process is the business owner’s ability to not only predict the types of risks their company might face in the future, but also the likelihood and frequency with which that risk could happen.
Why Is Risk Identification Important for BPM?
The importance of risk identification stems from the fact that as a business owner, it pays to be prepared for all possible risks that could occur for your business. Businesses that are proactive in implementing stringent inlying and outlying risk identification protocols are more like to gain a valuable understanding of the evolving needs of their operations. Whether that has to do with future expansions, upsizing, downsizing, or relocations, there are a lot of potential risk factors that need to be taken into consideration. As the saying goes, hindsight is twenty-twenty, but foresight is better. That’s where risk identification and management come in handy. Here are some of the benefits of risk identification.
Saves Valuable Resources
Taking a proactive approach to risk identification, assessment, and management can help save your business a lot of time, money, manpower, and other valuable resources in the long run. Experience is and will always be the greatest teacher, so be sure to take what you can from it.
Always pay your due diligence when researching new markets, demographics, and climates. Learning everything you can about these factors is the best way to prepare for everything they have to throw at you and respond accordingly without maximizing the use of your allotted resources.
Reduces the Risk of Unhappy Customers
Actively working to retain customers and keep them coming back reduces the chances of them having a negative experience with your business and, in turn, leaving negative reviews about your company online. As long as you take proactive steps to ensure your customers are happy like following up with customers, sending them personalized e-mails or gifts, and responding to all inquiries or complains in a timely manner, then you shouldn’t have anything to worry about.
Of course, mistakes can still happen and it’s impossible to please everyone, but part of having a risk management strategy is mitigating these negative reviews and customer complaints by showing customers that you care about their experience with your brand.
Boosts Employee Efficiency
Working to minimize your employee turnaround rate can significantly boost productivity, employee morale, and efficiency in the workplace. Employees will be able to take more pride in their work knowing that they work for a company that truly appreciates and respects them enough to provide them with comprehensive training and resources about your company values, return policies, and protocols.
Company personnel are an invaluable asset to your business and their well-being should always be a top priority. Proving to them that you’re doing everything in your power to create a productive and rewarding work environment will make it easier for them to work harder and smarter at the same time.
Gives You More Bang for Your Buck
Ultimately, the goal of implementing a solid risk management program for your business is to protect your company, your employees, your customers, and above all, your bottom line. Companies with a proven and tangible risk assessment and management plan in place are far more likely to maintain strong customer relationships and retain more customers in the long run.
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