Many leaders are willing to apply more enterprise risk management (ERM) or operational risk management (ORM) tools to their business to balance risk and reward WHEN they see benefits. After all, the costs of creating these systems or versions of strategic planning, contingency planning or business process management can be extremely expensive.
You will be pleased to learn that, once you start using a common sense approach of integrating risk management throughout your business, you will find areas where you can either reduce costs from reducing waste or inefficiency or improve revenue.
An example of this can be through applying ERM into better understanding your customer profitability and strategic values. Let me explain in more detail. In many industries, one of the most important assets is the quality of your customer base. Many leaders will say that until there are sales, there is very little or no value in the rest of the company
Consider the customer satisfaction and profitability emphasis on this 7 question approach used to better understand your customer base. This process flips a conventional view of integrating risk management in your business to looking at this from the perspective of your customers.
What are the top 3 concerns my customers have?
What actions can they take to minimize them? Which leads to the related concept of asking if they are taking those actions?
What are the best 3 long term opportunities for my customers?
How can they pursue those long term opportunities and are they pursuing them?
What are the top 3 longer-term risk areas for my customers?
What are the top 3 priority infrastructure issues for my customers?
How will renewable energy impact my customers?
Experts have found that as they evaluate the risks of their customers, they may also come across opportunities for themselves. By understanding the needs of their best customers and current and longer term pressures, both parties may find improved options. This is one of the limited areas where win win situations can be created. Hence taking risks out of your customer base or supply chain to better manage your business can improve your operations and even improve your bottom line.
Bottom line? - Risks are what really go wrong when you are not looking: stupid things like bounced checks, losing your best customers or best people when you are blindsided.
You need a perspective of business under the microscope and to have lived to tell the tale. After analyzing and helping over 200 companies, I have learned one key point:"What You Don't Know About Your Business Can Cost You Your Business."
Learn more about liquidity risk management or credit risk analysis