As a crucial arm of both compliance and business continuity planning, risk management is commonly a mandatory and revered part of loss prevention and mitigation protocol; without it, your business jeopardizes its chances of remaining viable amidst defaults, crisis and disruption. That said, while there are obvious steps to take towards proper risk management, there are almost just as many mistakes that could hinder your progress. 

Here are several common risk management pitfalls — along with ways to potentially avoid them. 

Eliminate the “low risk” mentality

There is simpy no such thing as a “low risk” scenario in business continuity; a risk is a risk, no matter how you slice it, and all potential risks — “routine, obvious or latent” in nature — should be identified and planned for during the management process. For example, consider the municipal response to weather disruptions in certain jurisdictions. While places like Washngton, DC routinely have weather within five degrees of Philadelphia, its regional disruptions from snow and ice are far greater annually. Is this because of the weather or because the Washington region doesn’t plan and invest infrastructure in snow removal as much as Southeastern Pennsylvania does. While this seems like a mundane comparison, consider the cost of snow days on your business and if a national clientele can contact you for business if your staff is stuck at home on a ‘snow day’.

By tiering risks in terms of severity and possibility, you run a subsequent risk: becoming too lax with certain scenarios and setting yourself up for a disturbing blindside, and, as risk management is intended to prevent or dull times of internal flux, this essentially contradicts all that you are working to achieve as a continuity planner. 

Avoid lessened involvement

Your workplace may feature employees who may wear several hats in terms of daily responsibility, but, generally, each worker’s skill set is only applicable to specific internal sectors. However, there is no reason why each area of your business cannot become involved in broad risk management efforts. As global credit card giant American Express highlights; “risk management can come in all shapes and sizes, which means that it’s everyone’s job”, it also impacts everyone equally when it is needed, so ensure that your employees are kept both involved and apprised of audits, training opportunities, and other initiatives focused on risk mitigation. 

Do not become a perfectionist, become a pragmatist

When assessing potential risks, it can be easy to fall into a perfectionist mindset — after all, your efforts may end up being the difference between life and death, efficiency or a lack thereof — but it is important to keep these feelings on a leash, as they can produce a counter effect in large doses. The easiest way to achieve this reality is to identify and accept a key fact: “there will be things that occur that you failed to predict; that’s simply the nature of life and business.” 

By accepting that there are things that every business manager may fail to predict, it’s important not to conflate that with issues that should be predicted and aren’t. Rather, it is how you plan to prevent and react to these challenges that speaks to your level of preemptive involvement. This simple shift in perspective can remove pressure and promote enhanced foresight. Therefore it’s best to find a balance between diligence and over-preparation that works for your organization.