Risk Management can be defined as being the set of measures an entity undertakes in order to deal with possible future contingencies, an entity being understood to be an individual or a corporation.
Some organisations tend not to consider the need to handle the risks that their activity implies, often generating negative consequences for business continuity. This presumed saving brings in its wake serious damage that in some cases can generate major losses or even the shutdown of the business.
All human activities involve risks. From the simplest actions through to the complex business operations, there is always an inherent component of uncertainty that must be understood and correctly managed.
Despite their best efforts, most organisations fail to correctly assess and quantify the risks and the impact that they might have upon their activities, bringing about a scenario in which they face risks for which they have lack the procedures and resources to weigh up and handle the same and mitigate their consequences.
Whilst there are no established rules that these processes or mechanisms must follow, it should be considered that a good risk management entails the following points:
- That the risks are identified in such a way that it is clear how to deal with them.
- Make it possible to see the whole picture of the risks involved.
- Know which are the most critical risks and prioritise their treatment in order of importance.
- This leads to the drawing up of a Crisis Management Plan so as to ensure business continuity in the event of the occurrence of the most likely risks.
For an efficient Risk Management process, consideration must be given to these principles to be followed throughout the organisation, regardless of its size:
- Internalise at the decision taking level the treatment of risks and their impact.
- A Risk Management culture that includes all personnel.
- Procedures that ensure that the information concerning risks and their treatment is correctly distributed.
- Continuous improvement and frequent redesign of the procedures.
At VANTEVO CLAIMS ADVISORS we are in a position to assist the Insureds to identify, control and mitigate their risks and we are certain that following COVID and its consequences, the importance to companies of Risk Management has become even more evident.