Risk management mistakes

The head of the print company is the one who should ultimately bear the responsibility for risk management.

There are three types of risk. First are the preventable risks. Examples are the risks from employees’ and managers’ unauthorised, illegal, unethical, incorrect, or inappropriate actions, and the risks from breakdowns in routine operational processes.

Then there are the strategy risks. A company voluntarily accepts some risk in order to generate superior returns from its strategy. A bank assumes credit risk, for example, when it lends money; many companies take on risks through their research and development activities. Strategy risks are quite different from preventable risks because they are not inherently undesirable. 

And finally, there are the external risks which arise from events outside the company and are beyond its influence or control. Sources of these risks include natural and political disasters and major macroeconomic shifts. External risks require yet another approach. Because companies cannot prevent such events from occurring, their management must focus on identifying and mitigating them.

Basically, printers can make seven big risk management mistakes.

1.     Undervaluing the identification, assessment and mitigation of natural disaster impacts on their business.

2.    Making insufficient efforts to quantify supply chain exposures.

3.    Failing to insist that the board of directors and senior executives provide oversight on risk management.

4.    Seeing only the statistical risk, and not the real risk of whether a business is at peril.

5.    Relying on insurance alone to protect their business.

6.    Not having a tested emergency response plan.

7.    Ignoring the opportunity to create a culture of risk management within their organisation.

 

Printers need to develop contingency plans in advance, preferably as part of the overall business strategy. These plans should be reviewed regularly. The printer should also nominate a crisis management team comprising the managing director, a human resources representative and the company lawyer. It is important to ensure the team members can be called together easily in an emergency and you have to arrange for all crisis management team members to have a card noting each others’ full contact details. Team members should role play certain crises. The company also has to develop and have in place an action plan with certain team members being given responsibilities for certain areas.

In the event of a crisis, they should make it clear internally that the only persons to speak about it externally are the crisis team members. The business owner, CEO or managing director should be the central spokespeople. The company should move quickly to quash rumours.

They should use external crisis management consultants and corporate image specialists who can bring specialised expertise to the table and work with the media rather than against it. It is important to give out accurate and correct information both internally and externally. Do not manipulate information as this can seriously backfire for the business. When deciding upon actions, the managing director should consider not only short-term losses, but also long-term effects.

And finally, the company has built into its internal and external communications strategy crisis communication processes to alert staff, shareholders, government, industry, alliance partners and media.

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