Don’t have a risk management plan? That’s risky business
Welcome to Episode 18 of Leader Talk! In this episode, we had the pleasure of sitting down with Leanne Heywood, the Non-Executive Director at three ASX-listed businesses - which are Galaxy Resources, Quickstep Holdings, and Midway Limited.
With over 25 years of industry experience behind her, Leanne is an expert when it comes to leading transformational change, divisional start-ups, organisational restructuring, disposals, and acquisitions. Throughout her career, Leanne has been at the forefront of several industries, including the advanced manufacturing, mining, rural, government, and not-for-profit sectors.
Leanne is a passionate and experienced leader with an extensive skillset. One area of her expertise is risk management, an essential part of a successful business. In this episode of Leader Talk, Leanne shares with us invaluable advice on how to approach risk management as a small to medium business.
To learn more about risk management from Leanne, keep scrolling to read her insightful thought leadership article about risk management below. You can also listen to our chat on YouTube, Spotify, Listen Notes, or Player FM. It's also available anywhere you listen to your favourite podcasts via Buzzsprout.
Authored by Leanne Heywood.
Risk management in the workplace is not a new concept. It’s commonplace to have dedicated risk management procedures in place to minimise setbacks, maintain the safety of staff, and to ensure the business operates smoothly. However, when things get busy or when we fall into old routines, it can be easy to overlook the importance of regularly updated risk management procedures. This is especially true for small to medium-sized businesses that may lack the resources to cover rigorous risk management. Putting risk management on the backburner can have numerous negative ramifications for your business, including employee and customer dissatisfaction, financial loss, or reputational damage.
How do small and medium-sized businesses approach risk management with limited resources and time? I’ve been heavily involved in risk management in various roles in my career including my current Non-Executive Director positions on the boards of Quickstep Holdings Limited, Midway Limited, and Allkem Limited. While each company is unique, I’ve learnt that regardless of how big or small your business is, the general principles of risk management remain the same.
How to approach risk management
Studies by Tomas Bata University and the European Journal of Business Management show that companies that implement risk management techniques are rewarded with higher performance than companies that lack risk management. Therefore, risk management is not only important for safety and stability, but it also impacts the overall success of your business.
So, how do you approach risks? As anyone working with risk management will tell you, the first step to mitigating risks is identifying them. Whether that means identifying workplace hazards, financial risks, or strategic risks, it’s important to consider every meaningful risk that may pose a threat to your business. This process should involve both managers and their teams. Every employee has a unique perspective on the business depending on their roles and responsibilities, so involving your whole team will allow you to undergo a holistic risk identification process.
My teams and I typically brainstorm any risk that comes to mind. We make sure the team knows there is no right answer; everything that is suggested goes up into the brainstorm to be refined later on. This allows us to identify as many risks as possible.
The next step is to rank the risks as high, medium, or low to give you an idea of what needs to be prioritised. This can be done through quantitative methods or intuitively. For small and medium-sized businesses, ranking the risks intuitively is an effective way to prioritise risks without using up too much time and resources. Things to consider when ranking risks can include the probability of the event occurring and the likely severity of the consequences of the event occurring.
After you have identified and ranked the risks from high to low, you can start mitigating risks. To ensure maximum safety, start by focusing on the highest risks first before moving on to the medium and low risks. Find the risks that you can completely eliminate and develop precautionary measures for the ones that can be alleviated.
Even when you think a risk has been mitigated, it can continue to pose a threat to your business if you don’t periodically assess it. Will the risk be an issue again in the future? What will you do if it happens again? How can your risk solutions be improved or adjusted?
After identifying, ranking, and mitigating a risk, you need to return to the situation to analyse and assess if the risk mitigation has been successful. Seek feedback from others who are familiar with the risk and evaluate ways the risk mitigation can be improved.
How to lead risk management in the workplace
Risk management starts with leaders. It’s up to managers and team leaders to initiate an effective risk management program and maintain a safe and successful business. I believe one of the best ways to continually alleviate risks in the workplace is to lead by example.
While your team may understand the rules and procedures surrounding workplace risks, they may not be motivated to adhere to these procedures if your business’s culture doesn’t encourage them to. If an employee sees their manager ignoring a hazard sign or safety practice, chances are, they’ll ignore the signs too. After all, how can you expect your employees to adhere to safety procedures when you don’t?
One such instance where I led by example to improve the safety of my team was when I set a hard rule to always take a break for lunch. This may sound small, but many of us get so caught up in our work that we forget to step away from our desks and nourish ourselves with food and rest. An article by Forbes cites that having no breaks puts us at risk of decreased productivity and mental wellbeing, making it a risk to both myself and the business. By ensuring that I took my lunch break outside every day, others in the workplace started doing the same instead of eating at their desks. It’s a small but transformative improvement as we go back to the office feeling rejuvenated and destressed.
Approaching risk management as a small business manager is often overlooked. I’ve noticed that small and medium-sized businesses often don’t prioritise risk management for two reasons: firstly, because business owners are typically too busy running their business to worry about issues that don’t seem to be of immediate concern, and secondly, because the costs involved in mitigating risks can be high. However, this puts your business in a dangerous position. What happens if a high risk materialises? From customers or employees getting injured by a hazard to suffering a huge financial loss due to an oversight in your business strategy, all sorts of risks can creep up on your business. The consequences of risks in your business can end up costing you significantly more time and money than if you had simply managed the risks early.
Expensive risk management systems and personnel aren’t always necessary for small businesses. Tools for planning your risk management strategy can be as simple as a whiteboard, a spreadsheet, and guides that can be found online. Don’t let limited resources hold you back from managing risks in your business.
Risk management isn’t just for the workplace
Managing workplace and business risks are essential to any functioning organisation. However, that’s not the only area of risk we need to be focusing on. Here’s a reminder that many workers need at some point in their career: don’t risk your personal life simply because you are focusing too much on business. Unlike in business, we don’t have team meetings and organised plans to manage the risks in our personal lives. It’s up to us to make sure we prioritise what’s important to us and not let overworking become a barrier between us and our loved ones.
My family is my passion. They know that they are my priority in life and understand that I will never be uncontactable because of work. If I’m in an important meeting when my children call because they need me, I’ll excuse myself and pick up. No matter what work situation I’m in, I’ll make sure that I am home as soon as possible if a loved one needs me, even if I’m a flight away. While I’m not saying that you always need to end an important meeting just because your family wants to chat, it is highly valuable that your loved ones know you are there for them despite work.
Another way I focus on my personal life, in addition to my work life, is by switching off my laptop and phone when I’m at home. With remote work and technology blurring the lines between work time and rest time, we’re seeing an increase in working on weekends and laptops open at the dinner table. Even if you are physically in the presence of your friends and family, it’s easy to get sucked into work mode when you see an email notification, a calendar reminder, or a work message. Consider switching off your work devices when in the presence of loved ones to ensure that you are fully present.
Switching off when you’re spending time with your loved ones isn’t only beneficial to your personal relationships, but it can also improve your wellbeing. Working on weekends or after hours can put a strain on your stress levels, which is a risk to both your mental and physical health.
Risk management is a journey, but once you start prioritising risk mitigation in both your business and personal life, you’ll start to see the significant improvement it can make in your world.