Risk management improves with keen observations. Try these five techniques over the next few months.
Financial Statements
When reviewing financial statements for a risk management audit, take a hard look at receivables aging. Compare collections to the prior period and to industry norms to spot trends that indicate rising risk.
Customers tend to pay their priority vendors first. If you are slipping on that list, determine whether the cause is credit terms, production delays, or other operational issues, and investigate promptly. For broader context on risk practices, see Risk Management and Insurance Overview.
Include Middle Management
Do not rely solely on information that "rolls up" the chain. Interview middle managers to get their perspectives on hazards, perils, and day-to-day safety concerns.
Middle managers often know practical issues and fixes that never reach senior leadership; asking for their input can reveal problems early and generate workable solutions.
Safety Committee
If your company does not have a safety committee, organize one. The CEO should be a member for visibility, but not the chair; include representatives from all levels and departments.
Interview committee members about how discussions are communicated to non-members. Are employees receiving information? Are recommended changes implemented on a timely basis, or do workers simply wonder why fixes are not happening?
Disaster Plan - Contingency planning
If you don't have a contingency plan, create one and use the exercise to rethink how you would rebuild operations after a disruption. A well-considered plan can double as a practical blueprint for recovery, and external resources may help refine technical elements such as facilities and systems recovery; consider reviewing options like Computer Facilities Management Insurance where appropriate.
Examples to consider
- Does it make sense to move closer to your suppliers?
- Does it make sense to move closer to end product users?
- What is the next generation of equipment you would need?
- What features should the next generation of equipment possess?
Ask the people who work with the process daily — they will often have practical, low-cost ideas you can implement quickly.
Listen
Listening is almost a lost skill. Interviewers and investigators have two ears and one mouth — use them in that ratio.
Take time to hear employees at every level; they rarely feel heard, and attentive listening will often pay dividends in early identification and resolution of risk.
If you need help implementing these steps, talk to an agent who can review options specific to your business.
Frequently Asked Questions
What receivable trends should trigger a deeper risk review?
Look for increasing days sales outstanding, a rising proportion of past-due accounts, or significant concentration with a few slow-paying customers; any of these warrant further investigation.
Who should sit on a company safety committee?
Include representatives from frontline staff, supervisors, HR, operations, and at least one senior manager to ensure visibility and follow-through.
How often should a disaster or contingency plan be reviewed?
Review plans annually or after any significant operational change, and update them whenever new technology or suppliers alter your recovery needs.
How can I encourage middle managers to share concerns?
Create confidential feedback channels, hold regular listening sessions, and act visibly on reasonable suggestions to build trust and participation.