Risk management in a crisis
The unprecedented crisis created by COVID-19 has revealed the importance and necessity of risk management, while also showing that there are some situations you just can’t plan for. The best response? A clear, precise risk management framework that takes into account the critical processes of your organization's key functions, coupled with an underlying process framework that is resilient and robust enough to cope with change. The power of this combination is the essence of how process management helps you handle risks.
The COVID-19 almost defies categorization, but in general the health crisis is a risk that could be labeled categorized as an environmental risk: a major, rapid event with multiple repercussions, affecting all industries and companies of all shapes and sizes. Workers are in lockdown, and organizations must respond to sudden change to ensure the health and safety of their teams while maintaining business continuity as much as possible.
As a result, COVID-19 has put risk management at the heart of discussions in companies around the world, as businesses work to minimize the impact and avoid losing money and time, reducing services and damaging reputation, and in the worst case directly affecting employees. A well-defined risk management framework can help you mitigate risk and its impact and keep your business in balance.
The multiple risks of the modern company
When we talk about risk in a business setting, we consider the likelihood of a given event something happening and consider its consequences. Then we develop the controls that must be put in place to prevent that risk occurring (or minimize the damage if it does occur) and ensure business continuity.
As such, risk management is a real force for mitigating the consequences of the COVID-19 crisis within organizations. Risk management helps you identify the risks within your critical business processes and establish the controls you need to put in place to reduce them, which facilitates operational and strategic decision-making.
Risk management ensures operational and financial maintenance through a global vision of the risks incurred at the various levels of the organization. Risk management is a fundamental pillar of any organization. Understanding how process management helps you handle risks must be an integral part of the corporate culture, and must be communicated to all your employees.
How process management helps you handle risks
The modern organization faces many different types of risks that can impact various functions of your business. The specific form these risks take are particular to your business sector and your organization, but they can be broadly fit into five families: financial, operational, compliance, employee, and health & safety. Below is a brief guide to how process management helps you handle risks falling into each of these categories.
The risks here are related to your financial dependencies, the processes that generate liquidity in your business such as the procure-to-pay process, and your cash flow more generally. Many organizations are financially impacted by the COVID-19 crisis; yours could be among them. Anticipatingis a strong start, but process management (and in particular effective process mining) can help identify any vulnerabilities related to the financial aspects of your business.
Process mining can uncover the way your financial processes flow in real life, and measure the factors that have the most impact on your internal cash flow. Questions like:
- Do you depend on a small group of customers who contribute disproportionately to your cash flow? Are they creditworthy?
- Are you collecting your payments on time?
- Are your customers and suppliers also facing impacts from a crisis situation, and what does that mean for their interactions with your business?
Effective process mining gives you the information you need to understand what degree of risk is at the heart of your Finance department's processes. Then, process optimization can ensure you have the right controls in place (in the form of, for example, approval points, managerial oversight, or automated notifications) to make sure you are prepared for the worst.
These risks are related to your company's own operational procedures. Let's take the example of an organization whose value chain is disrupted by the COVID-19 crisis, as noted in the section above. This company depends on a key supplier to produce its product. If that supplier is no longer able to guarantee supply, then the organization is in trouble.
This is a risk for which preventative solutions must be defined in advance in the event of unexpected problems: inventory management, another supplier offering an equivalent product, and so on. The key is to ensure that these solutions can swing into place exactly when needed, and the way to ensure this is to have a clear, well-understood process model already in place, which is shared and understood throughout the organization. Building in redundancy in this way minimizes the risks of disruption and their impact on your value chain.
Managing risk is naturally linked to the various regulations and laws that your sector of activity is subject to. Even in a crisis (or perhaps especially in a crisis) keeping the regulators happy needs to be a top priority. With the right process management technology, you can make quick and easy real-time compliance checks based on your own data.
By comparing the way a process should run, to the way it actually runs, compliance violations can be detected and the appropriate action taken immediately. This approach even means you can automate your reporting obligations, making complex manual reporting a thing of the past. This makes each risk and its associated controls more transparent to the workers responsible for monitoring and responding to those risks. Regulations and other requirements can be translated directly into operational decisions for employees to use every day, further embedding risk management into their work.
Your organization must retain a sufficient number of employees to operate while taking into account their safety. You can also add the skills of employees to carry out their daily tasks efficiently, according to the rules established within your organization and industry. A pre-existing process framework that supports the effective use of robotic process automation is of great benefit in a crisis situation, as it can mean that some routine business tasks can take place with minimal human oversight. In turn this frees up human workers to focus on mission critical tasks, and responding directly to the impacts of the crisis.
Health & safety risks
In the context of the COVID-19 crisis, health measures must be respected to ensure business continuity and the safety and health of your employees: mandatory wearing of personal protective equipment (PPE), implementation of physical distancing in the workplace, and so on. While process management may not be a direct solution to these sorts of risk management techniques, the standardization and distribution of the information employees need is greatly helped by an existing method of disseminating information quickly through an organization, i.e. a.
Risk and compliance management in 7 steps
"If you want to improve yourself, strengthen the quality of your services, and avoid a crisis, you need to understand and identify when you can face risks and their type, manage these risks, and reduce their likelihood in order to avoid them. That's your best asset! It's an effort but it pays off in the long run."
Sherwin Towfighian, Team Lead Consulting MEE, Signavio
Process management helps you to handle risks, and Signavio has the tools you need to handle effective process management. The Signavio Business Transformation Suite gives you the ability to establish detailed and documented risk mapping, linked to your processes, and ensure effective and permanent control to preserve compliance and mitigate risks within your company.
In fact, Signavio offers a 7-step approach to effective risk management:
- Define and communicate
- Identify and document
- Design and inform
- Deploy and evaluate
- Solve and adjust
- Monitor and reduce
- Manage and improve
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Mitigate your risks with Signavio
The, a powerful, all-in-one solution, allows you to plan, implement and automate your controls to ensure efficiency throughout your organization. In addition, our 90-day offers immediate help to companies of all types and sizes, including NGOs and healthcare organizations, to ensure business continuity.
You can find all our content related to the COVID-19 crisis on our. In the meantime, you can follow updates on COVID-19 on the website. On behalf of the entire Signavio team, take care of yourself, your colleagues, and your loved ones.