Guest blog by Jason Desaulniers
In the first installment of “It’s a Process”, Mike Mack took us to a ranching operation located within the Big Muddy Badlands in southern Saskatchewan. On that visit we discovered that process and productivity go hand in hand even in places we rarely consider them as being a topic for discussion. For the second installment, Dennis Bridges took us from the fields of Saskatchewan to the utility rooms of Northern Alberta, where we gained some insight into a growing plumbing company’s challenges with managing that growth while maintaining oversight and control within their operation.This week we’ll bring the discussion straight to the boardroom, where we will explore some of the steps involved with risk management planning for businesses and their families.
What is “Risk Management”? Let’s break it down into two pieces: Risk and Management. Risk may include such possibilities as a building burning down, an unhappy customer bringing forward a lawsuit, an employee becoming injured, an executive leaving for another employer, or a partner having to suddenly buy-out another partner due to illness or injury or death.
Management is…simply put…discovering and then deciding if/how to deal with the numerous risks that any business might face. Where risk is concerned, there are generally only four potential options available once those risks have been identified: Retain the Risk, Reduce the Risk, Share the Risk, or Remove the Risk. To remove the risk is to eliminate it…meaning that the business is no longer affected by that risk, due to that “item” no longer being a part of the business. Retaining the risk is the default result, where no steps are taken with regards to a particular risk, it is therefore automatically retained. Reducing the risk is similar to removing the risk, in that reliance upon that particular “item” is reduced in order to mitigate the risk. Sharing the risk involves paying somebody else to take on that risk, such as an insurance company to cover off potential liabilities, buy-sell funding options, key employee retention, etc.
Risk management requires careful analysis and consistent implementation of solutions designed to mitigate those risks once they have been identified and quantified. After all…failing to plan is planning to fail. What is your risk management plan?