Benefits of risk management

Benefits of risk management
See also
Management by innovation Business risk management Relevant information Feasibility analysis Quality cost Risk management process Business improvement Litigation risk Importance of swot analysis

There are multiple benefits of risk management in projects, quality management, information security or finance. The article presents benefits for each of those areas.

Benefits in project management

According to Project Management Institute project that use proper risk management process are less exposed on failure. The can achieve as much as 15% higher success rate. This comes with:

• 17% increase in cost efficiency,
• 15% increase in schedule efficiency.

Even the single, but significant risk, that was averted can pay for the implementation of risk management process.

The main benefits of risk management in project management are:

• improved planning,
• more effective use or resources,
• reduced costs of legal actions and prevention,
• higher reliability,
• quick response to opportunities,
• higher confidence of stakeholders,
• better quality of communication.

Benefits in quality management

The risk management in quality management systems was introduced by ISO 9001:2015 standard. It replaced preventive actions. The main results of this change are:

• better understanding of results of quality actions,
• extended understanding of internal and external factors influencing enterprise,
• extended planning leads to better results,
• enhanced responsibility for improvement actions,
• removal of dead preventive actions mechanism,
• achieving continuous improvement in areas that are important for the company.

Benefits in information security

The risk management is essential part of information security management system. The key benefits are:

• increase in trust which leads to better sales,
• lower chance of information security incidents,
• better business decisions due to extended view and confidence,
• saving money due to more efficient controls and effective architecture or information system
• increased business continuity,
• ability to provide products and services during unforeseen circumstances and emergencies,
• improving communication and whole information system,
• confidence and better sleep.

Benefits in finance

Risk management in finance is understood somewhat differently than in other areas, however the methods used are similar. The main benefits are:

• access to better offers of banks,
• lower interest rates,
• lower insurance costs,
• limit and protection of liability in case of a lawsuit,
• protecting resources,
• reducing costs of risk events,
• production contingency planning - increased flexibility,
• change in business culture,
• better understanding of results of decisions by managers,
• more time to prepare for anticipated events.

References

• Wawak S., Planning in ISO 9001:2015
• Raz, T., & Michael, E. (2001). Use and benefits of tools for project risk management. International journal of project management, 19(1), 9-17.
• Akintoye, A. S., & MacLeod, M. J. (1997). Risk analysis and management in construction. International journal of project management, 15(1), 31-38.

Author: Slawomir Wawak