In today’s ever-volatile social, economic, geopolitical, global, and technological business environment, the ability to manage risks is an imperative business strategy.
Every business — for-profit or non-profit — experiences some level of risk. Natural disasters, prolonged power outage, technological disasters, economic crisis, pandemics, for example, affect all and the level of impact can range from a short-term disruption to a disastrous catastrophe. Preparing for and managing these risks well is essential to the success of the business' objectives, however, managing the risks starts with risk management planning.

Have you ever heard the quote, “Plans are worthless, but planning is everything”? It is accredited to U.S. President Dwight D. Eisenhower although there have been many variations of it quoted by several notable famous people in history and present. While the maxim permeates military preparation and planning, it is also referenced quite often in the realms of risk management, as the concept he expressed is universally applicable.
In risk management, it is not enough to simply have a plan if the plan does not live and breathe with your daily operations. It is in the planning that you encourage learning, discover weaknesses and vulnerabilities, create risk awareness, increase open communication across multiple channels, and identify gaps and information to develop effective and clear strategies.
Why is risk management important anyway?
Businesses of all sizes need risk management:
A small retailer who is losing money due to constant incidents of theft and vandalism does not only need insurance but also risk management to implement preventive and control measures that will prevent and minimize the chances of these incidents.
Similarly, a large construction company that experiences constant onsite injuries and accidents, needs in addition to insurance, risk management programs to implement compliance and safety regulations that will minimize the hazards and risk of injuries and accidents.
A multinational company that sources supply from other countries, will have to implement risk management strategies to address the risk and impact of supply chain disruptions.
“Plans are worthless, but planning is everything” – Dwight D. Eisenhower
Managing risks goes beyond these risk scenarios illustrated in the three examples above, that is why risk management planning is essential. Let us look at some of the benefits of risk management planning.
10 Reasons Why Risk Management Planning is Essential
Good risk management planning enables businesses and organizations to take a long-term holistic view of the operations to make feasible and pragmatic strategic planning based on awareness of the risks and opportunities.
The planning aids in identifying elements of uncertainty, internal and inherent risks as well as external threats to the organization. While it is important to note that one cannot identify and plan for all risks or threats, the process enables businesses to prepare, improve controls, manage key risks, and be better positioned to respond to the unexpected catastrophic events.
Risk management planning can ensure better allocation of resources to minimize uncertainties and reduce manageable losses. This saves money in the long run.
The planning can lead to exposing areas of opportunities and drive management attention to unmet gaps that can be explored for long-term growth.
Risk management planning can create employee engagement, open communications, risk awareness, accountability, and build employee trust and confidence in the organization.
The planning can foster an environment of creativity, innovation, and a continuous improvement of processes, procedures, and operations.
Risk management planning can facilitate a balance between perception and reality, value creation and risk appetite that can increase confidence in management and investment decisions.
Risk management planning can promote business continuity planning, emergency preparedness, crisis readiness, market responsiveness, and encourages a long-term growth mindset.
Risk management planning creates a good risk taxonomy and ensures that organized predetermined contingency plans are in place to respond to uncertainties and crisis.
Good risk management planning promotes compliance, manages business image and reputation risk, and thus builds confidence in internal and external stakeholders which by extension can increase the business’ value.
In a nutshell, good risk management planning enables smart decision making, however, it is not only important to plan but also to integrate the planning and plans into the operations processes, so it becomes an active program rather than a stale plan.
Risk Management is not an easy or a static plan, but a dynamic ongoing process that evolves with the organization, market, social, economic, legal, technological, environmental, global, and geopolitical demands.
You can start your risk management planning regardless of your size. Get your free Starter Guide and start on your journey to building your dynamic risk management programs.
At Axios Risk Solutions, LLC., we help small and medium-sized enterprises, families and individuals minimize and manage their business risks through tailored risk management strategies and protect their business and assets through a variety of insurance solutions in the market. To request a quote or speak to a broker, call us at (404) 480-0272.
Author: Sandra Owusu-Fianko
Sandra Owusu-Fianko, is the Principal and Risk Advisor at Axios Risk Solutions, LLC. She has extensive experience in the insurance industry and a MS degree in Enterprise Risk Management. She is passionate about finding appropriate risk management and insurance solutions for her clients.