A risk register is one of the business world’s most important yet least-discussed tool. Acting as a directory that can prevent significant financial harm to a business, a risk register should be every company’s go-to guide when it comes to monitoring the health of a business. They should be used across departments and be frequently updated as the business grows and works with other third parties.

Yet despite their importance, businesses often never create risk registers. Typically, companies are vaguely aware of certain risks, such as clients that pay invoices late or vendors that sometimes send defective materials. While this is a good start, the lack of organization when it comes to keeping track of potentially devastating risks can cause serious harm to a company. Indeed, very few companies have a uniform document or guide of risks that all employees can refer to and update.

A risk register can serve as that uniform document. Serving as an aggregate of information related to potential risks, a risk register helps an entire organization be on the same page. With it, employees across a whole business can work in unison to prevent potentially catastrophic mistakes.

Pros of a Risk Register

The pros of risk registers far outweigh any negatives that may come with it. By creating a register, a company is protecting itself from preventable errors and other damages, while also serving as a guide for other employees to keep an eye out for already-existing risks.

It can save money

The ultimate goal of a risk register is to prevent risks from becoming real, tangible issues for the company. Should a risk become real, the money and resources spent correcting the issue can cause serious harm to a company’s bottom line. In addition, the money and efforts spent repairing damage to a company can also result in losing personnel, or even getting some hits to the business’s reputation.

There are other risks that can harm a company’s assets – risks that affect income. Another way a risk register can help a company to save money is by keeping track of ways that business may be losing income.

Programs make them easy

While some companies may opt to make a register from scratch, there is plenty of third-party and vendor risk management software out there to make the process simple and easy. These programs review all third parties that are associated with the company. This includes vendors, contractors, and other long-term associates.

These programs do the hard work of creating a register for you, while also serving as a standing monitoring program. By monitoring risks, the risk management program can help a business keep an eye on lower-priority risks that could grow or have already begun to grow.

It helps with monitoring

Not all issues that are discovered during a risk assessment need to be immediately addressed. These lower-priority issues should not be ignored altogether, though. These smaller risks should be monitored by various departments, to ensure that they don’t become bigger issues.

Risk management programs do the heavy lifting when it comes to long-term risk monitoring. On top of this, risk management programs will also assess the risks associated with future vendors. This can help minimize future risks being inadvertently created.

Things to Consider

While there are no real downsides to creating a risk register, the process of creating a register does require resources that not all businesses may have. It’s important for a business to note these negatives as well, so that a business can make a fully informed decision.

It requires time and manpower

For smaller operations with few employees – or even just one employee – the time and effort that goes into creating a risk register from scratch may cause more harm than good. Client work may be put on the back burner in favor of finishing the assessment, for example. Employees may also feel pressured to work within tight deadlines if they are creating the register from scratch instead of using a program. Finding a way to temporarily divide the day-to-day work of the risk assessment’s team amongst other employees is one way to work around this problem.

Another way a risk register may negatively affect the company is if the person or team that carries out the assessment wears several other hats within the company. This can cause mistakes to be made during the process, thus resulting in faulty information that could ultimately cause harm to the business. Businesses may sink time and resources into repairing a low-priority (or even nonexistent) risk, while more important risks are left unnoticed and unresolved.

It requires money

If a business ends up investing in a risk management program, they must ensure that funds are reallocated to support that purchase. This can take away money from other departments or aspects of the business or delay other necessary purchases.

In addition to these mild setbacks, if a business is unable to afford a higher-end program altogether, employees should look for other ways to find the needed funding. If there are no options available, it is important that employees investigate all possible alternatives for conducting a risk assessment and creating a risk register. This can include using free programs such as Google Sheets to create a rudimentary risk register, following online video tutorials to create a register using various Microsoft programs and similar tactics. However, these inexpensive alternatives will only create basic risk registers – they will not be as comprehensive or be at the same level of quality as registers created with risk management programs.

Overall, risk registers are a cornerstone of risk management and keeping a business healthy. They allow businesses to keep track of every risk threatening the company, both big and small, and help companies save time, money, and resources. Without risk registers, a company is vulnerable to a myriad of threats, and will be ill-prepared to prevent them. And by investing in a proper risk management program, a company can prevent more risks from forming as time goes on, as well as keep a sharp eye on any risks that have gone unaddressed.

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