The story is told that when BP suffered the catastrophic loss of the Deepwater Horizon oil platform in 2010, there were corporate injunctions against carrying coffee without a lid or texting while driving. It seems surreal to think that with such careful rules around personal activity, there could still be an incident of that magnitude.
While making rules about what can and can’t be done has merit in some circumstances, creating processes that provide comprehensive guidance for business practices is a much more effective approach to managing risks.
Expect the unexpected
A business risk includes anything that could go wrong in the business operations, from PR storms to product failures, litigation, financial misfortune, or natural disasters. The consequences of such events can be major or minor, but all of them will have an effect on how the company can reach its goals.
These dangers become even more prevalent during periods of change. The introduction of new product lines or an acquisition can increase possible breakdowns in manufacturing or open an organization to potential litigation or bad press. Changes to the business environment, legislation, or even cultural and environmental events can impact and influence company operations in ways that could potentially cost hundreds of thousands of dollars.
For example, after the cleanup and reconstruction phases that followed hurricanes Katrina and Harvey, numerous businesses still struggled. While the waters had receded, the residents had too, and many found their customer bases were dramatically smaller than they had been before. The change of context made a dramatic difference to many, with numerous small businesses unable to recover, despite being completely rebuilt.
Rather than put the company on the line, businesses are required to mitigate what hazards they can by managing risks to the best of their ability, reducing the potential danger to staff, resources and profits. Ultimately, it’s a process problem. While people, systems and external forces create the conditions that constitute risks, it’s processes that will manage them, and bear the impact they have on your business.
Mapping processes to mitigate risks
Process management is where you define what gets done, and what should get done in the operations of your organization. Through good process management, a business can discover the procedures and practices that shape ongoing operations, and through understanding them, improve them. By capturing that information, teams can also share best practices, ensuring standardization and compliance with effective processes.
By providing process documentation that is easy to access and understand, organizations can reduce the likelihood of staff inventing their own practices. Integrating supporting documentation makes it easy to follow good processes, clarifying steps, providing forms and guides, and explaining procedures where technical details are required. With clear processes to follow, the risks of ad-hoc compliance and process breakdowns through unclear instructions, inadequate checks, or incomplete execution are dramatically reduced.
It’s not just everyday processes that can help with risk management. While it’s important to clarify typical business practices, having disaster procedures documented and available can be crucial in the event of an emergency. By considering the requirements of extreme circumstances and preparing for them, the organization can both respond more efficiently and recover more effectively.
Clear governance for effective controls
Mitigating risks is a matter of managing the possibilities and establishing controls to eliminate, isolate, or minimize the potential harmful effects. Ensuring those controls are in place and effective requires accountability and a structure of oversight that includes those who know the processes best, and those responsible for their ultimate execution.
A clear governance structure provides transparency around process management in this way.
Ideally, processes are the responsibility of specific individuals, not faceless job titles. Understanding who is responsible for both the execution and upkeep of key processes ensures that there’s a specific focal point for process updates, and changes and reviews won’t slip through the cracks.
When those reviews are carried out, tracking the recommendations and possible changes is important for risk management. Evolving processes can easily introduce new risks or allow for possibilities earlier practices wouldn’t have had to consider.
Knowing who made changes, when, and why is a valuable tool for controlling potential risks. Audit histories and approval systems ensure clear paper trails and appropriate checks and balances and provide evidence of good practice in managing the potential risks. By having invested experts monitor process evolution, your business can have confidence that the processes are protecting you from risks, not introducing them.
Continuous improvement for ongoing cover
Change brings risk, and if your processes can’t shift and grow with those changes, then the risks will multiply quickly. Developing a culture of continuous improvement provides the agility necessary to keep pace with changing contexts and conditions, maintaining effective controls as risks shift and develop.
That’s not to say that processes should stifle change. Innovation and growth are essential for business health and continued success.
Good risk management doesn’t hinder that but allows for and encompasses it, providing safe structures for rapid development and recognizing the inherent dangers while eliminating hazards wherever possible.
Good process management will incorporate this in the fabric of the process changes, with technologies like automation eliminating human error while accelerating execution speed and streamlining process handovers.
It is impossible to do business without risk, but it isn’t difficult to recognize and control those risks effectively. Process management provides a framework for recognizing where risks could most affect your organization and establishing meaningful controls. With clear governance, teams can be accountable for the management of the risks they engage with and – through a culture of continuous improvement – provide ongoing structures for mitigating them.
Interested in learning more about the Nintex Platform and how it can help your business navigate risk management? Click here to request a live demo to see what Nintex can do for you.