Risk Management, Corporate Culture, and Insurance
Entrepreneurship and innovation drive the growth of business enterprises. Risk taking is a part of entrepreneurship, if balanced with risk management and preventive damage- mitigation, as well as with insurance protection, to achieve healthy growth of a business. To maintain this delicate balance, business leaders need to assess if the corporate goals and employee goals are in alignment with desired risk management outcomes, and if short term metrics and rewards drive decisions that can damage reputation in the long-term.
In managing risks, companies need to first craft out policies and procedures, such as:
- Develop risk management strategy and update it regularly.
- Create a risk framework and a unified culture for the entire company.
- Spell out roles, responsibilities, leadership, check and balance, accountability.
- Maintain transparency among management, owners, stakeholders, etc.
- Monitor the performance & approaches to managing risks.
- Involve finance, legal, HR, and IT to mitigate risks.
- Empower internal audit with independent assessment of risk management practices and suggest to the Board re relevant strategies.
Technology can ease the tasks for capturing and organizing internal and external risks data, and monitoring and reporting the risks into scores within risk appetite and limits. This should be balanced with empowering employees to take appropriate and calculated risks in the pursuit of short and long term business goals for healthy and ethical business growth. A risk culture enables employees to play an active role in risk management while unleashing their drive for more successful and predictable business outcomes.
Once the management has set a high standard of ethics and a culture of compliance, it should be trickled down to every part of an organization. Business leaders can drive the entrepreneurial spirit balanced by corporate risk management culture. This alone will not guarantee good management of risk decisions every day. Proper insurance will protect the unexpected and is always an integral part of the entire risk-management strategy, policies, procedures, and culture.
The Rick Callaway Team at Pacific Diversified is the extra miler in protecting businesses and a partner to managing risks. We focus on commercial real estate, hospitality, such as office buildings, multi-family dwellings, apartment and investment homes, restaurants, hotels, night clubs. Visit our website: https://omgwaterford.wpengine.com/ and call us. Thank you!