Re-examine your current risk management processes: Do they really work in today’s environment?

The recent outbreak of the Corona Virus is a perfect example of how risk, whether biological in nature, man-made, environmental or regulatory, can rapidly change a company’s business plan or effect the current global business outlook. As the virus continues to spread, business plans are being impacted, especially the business plans of companies in the travel, tourism and convention industries. This should give everyone pause and perhaps encourage everyone to reflect on the current risk management processes they have in place including employee safety related processes. Perhaps it is time to change the processes. Or at least re-examine them.

When talking to your staff or to other departments, how often have you heard the phrase “That the way we have always done things.” Just because corporate processes have been done one way doesn’t mean that the best way or even in todays’ fast changing world- the right way. Even after the financial meltdown of 2008 many companies continued to use the failed metrics that got them into trouble in the first place. Even the credit markets haven’t changed as much as you would think after 2008. Why?

I truly believe that once processes are created in a corporate or bureaucratic environment, it is as if the processes have been set in stone. They are very hard to change. Even if the world around the company has changed. It is human nature to accept what has been done in the past. Few people want to “rock the boat” even if the proverbial boat is actually sinking. Companies get into real trouble because of this. What happens if the company’s business model actually is out of date or its business plan is no longer viable? Just because it worked in the past doesn’t mean it will work in the future. Do the processes really mitigate risk or not?

I therefore caution everyone not to blindly accept the current risk management processes in place. Risk managers as well as in house counsel and other managers should be challenging risk management metrics on a regular basis. Counsel should be auditing departments on a regular basis. Does that compliance program really work? Does the safety program really work? Maybe the plans worked properly 5 years ago. But what about today?

Remember, if local or national laws have changed maybe the current processes are out of date. If the products that your company manufactures or the services it provides have changed maybe the internal processes surrounding the review of those products and services are out of date. What about the current social environment? What about the regulatory environment? When reviewing your current product liability review processes have you factored in the new risks created by the Internet of all Things? These risks are real. Are you ready for them?

It is a fundamental truth that all things change. Some change faster than others. Regardless, don’t rely on your old or standard risk management processes to continue to provide the same level of comfort they did in the past. Continue to review and to modify them if necessary.

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