A one-two punch to knock out road blocks to your success!
Small and medium sized businesses are often too busy running the day-to-day operations to stop and plan for the future. The owner has a vision in their mind of what they want the future of their company to look like but they take little time to plan for that vision. It was pointed out in a Globe and Mail article that businesses that create formal strategic plans increase their chance of success by 30 to 50 percent.
An investment in Strategic Planning and Risk Management is how you can increase your chance of success and increase the value of your organization.
The creation of a strategic plan is the first step to getting that vision out of your head and committing it to paper. The plan doesn’t have to be elaborate as long as it starts with clear and concise goals. If you are unsure of your goals, ask yourself the following two questions:
1) How will I know when I reach the goal?
2) How will I prove that I’ve reached the goal?
If you can answer these two questions you have clearly defined your goals. The next step is to identify what strategies you will use to reach each goal. What actions will you have to take in order to make the goals a reality? These are the basic building blocks of your strategic plan.
By creating and implementing an Enterprise Risk Management (ERM) program employing the tools of Enterprise Risk Management (ERM) and by performing a Risk Assessment against the goals you will identify how risk can affect your plan. A Risk Assessment can help you understand the structures and processes of your company and how they can impact the strategic goals. Unpleasant business surprises, or risk events, can be managed and prevented if a proactive approach is taken and mitigation plans are implemented.
Hint: Incorporate your mitigation plans into your strategic plan Action Steps. In this way your will be working to reduce risk while moving towards your Goals. With your strategic plan in place you can now carry out your strategies to obtain your Goals.
A recent study in The Journal of Risk and Insurance at Queen’s University, UK, found that companies that had higher levels of ERM maturity have a higher firm value up to a magnitude of 25%.
By adding strategic planning you increase your chances of success by 30% to 50%. By implementing an ERM program alongside your strategic plan you start to lower the cost of risk and improve performance. which leads to an increase in the value of your company, building that vision into reality.
The tools of large businesses are available to small and medium sized businesses. The same commitment applied to start a company needs to be employed to ensure its success. By adding the tools of strategic planning and ERM program to your business arsenal, you will increase your chance of success and reduce risk.
The Valuation Implications of Enterprise Risk Management Maturity. / Farrell, Mark; Gallagher, Ronan. In: The Journal of Risk and Insurance, Vol. 82, No. 3, 09.2015, p. 625-657. Research output: Contribution to journal › Article.