How to Write a Risk Management Plan

Risk Management includes assessing, measuring, evaluating, monitoring and controlling risk. Every business face many kinds of risks which mainly include credit risk, market risk, operational risk, equity risk and rate of return risk. You cannot earn profit from your business until or unless you undertake some risk. However, you earnings depend on how prudently you can manage your risk and to what extent you can take risk.

Therefore, writing a risk management plan is one of the most important steps in doing business. If you are looking forward to write a risk management plan for your business, you can take help from the given steps.

Instructions

  • 1

    First of all, you have to assess the risk which you face in your business. One of the easiest and the most convenient ways is to conduct SWOT analysis to assess risk. In SWOT analysis, you will first assess the internal strengths and weaknesses. Then, you will assess the external opportunities and threats. The quality analysts try to analyse the internal weaknesses and external threats with special attention which provide the basis of risk management plan.

  • 2

    After the assessment and evaluation of risk, you have to take measures for controlling it. You can make standards and benchmarks for the risk. Furthermore, you also assign particular weight to the risk. For instance, if you have two products and one is launched in a market which has low level of technological advancement, you can give it less weight. While on the other hand, the market of the second product is highly volatile because of high level of technological advancement, you will assign more weight to it.

  • 3

    You have to create a good relationship with the advocacy group of the industry. Generally, the risk which is faced by one company in an industry is almost the same as the risk faced by another company in the same industry. Therefore, the advocacy group may provide valuable suggestions to you for making the right strategies to cope with the risk.

  • 4

    After making the risk management plan, you have to review it with the stakeholders of the company. The main stakeholders include the managers, customers, suppliers and legal advisors. Discuss each and everything with the stakeholders so as to take valuable suggestions from them.

  • 5

    Keep on performing periodic review for the risk management plan in order to make it relevant to the present scenarios.

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