How to create and use a business risk management plan
Risk is everywhere, and for businesses operating in the modern world, the stakes couldn’t be higher.
There were 3,205 significant data breaches in 2023 impacting over 350 million total victims. That’s nearly nine incidents every single day of the year, and many of them brought significant financial and reputational harm to the affected businesses.
What’s worse, data breaches are just one of many types of risk your business faces. Natural disasters, shifts in markets and demand, supply chain issues, new competitors and technologies, and dozens of additional risks must be identified and planned for.
That’s why having a risk management plan (RMP) isn’t just a checkbox — it’s your safety net, your strategy for weathering the unexpected without derailing your goals.
Here’s everything you need to know about risk management planning, and how your business can get started with this crucial process.
What is a risk management plan?
A risk management plan helps businesses document potential risks, assess their likelihood and impact, and outline strategies to handle and mitigate their consequences.
A documented risk management plan is key to a strong risk management strategy, aligning stakeholders and project teams on identified risks and agreed-upon responses.
Why do you need a risk management plan?
An RMP is essential because risk is unavoidable.
Risk is everywhere, no matter what your business does, and unmanaged risk can seriously impact your operations — even threatening business continuity. Accordingly, you should have a clear plan to respond to potential risks and a way to document new, significant risks you identify along the way.
Consider the risk of a piece of sensitive mail going missing. We know a small amount of mail goes missing from the USPS every day (a lot of it ends up in Atlanta), and some of it contains private business or personal information.
If a confidential or essential piece of business mail is lost or stolen, it can lead to reputational harm, financial loss, or even regulatory penalties — especially if it ends up in the wrong hands. For example, if a healthcare provider fails to securely mail protected health information (PHI), that’s a HIPAA violation.
A strong risk management plan should address any potential risks that your business may face and include preventative, mitigation, and response strategies. With a plan in place, your business can avoid making hasty decisions and address risks proactively.
How to create a risk management plan
We’ll get to the step-by-step process for writing a risk management plan soon, but let’s start by addressing risk identification and management.
Before building your plan, you’ll need to decide what makes sense to include based on your specific business needs. Use the following elements as a guide to shape your risk analysis and help you determine what risk management could look like for your unique situation.
Set risk management objectives
First, ask yourself: Why are we doing this? What do we hope to achieve?
Remember, you’ll never completely eliminate risk or its negative impacts. Instead, most businesses have to do some risk management prioritization, as they don’t have the resources to tackle every risk. Setting objectives will help you focus on what matters most.
These are big-picture objectives, and it’s OK if you don’t know all the specific risks yet. The key is to be clear on what you want to accomplish with the risks you identify.
Here are a few common risk management objectives to get started:
- Reduce the number of risk events by x%
- Keep financial losses from a risk below $x
- Improve issue response time by x minutes
Pin down sources of potential risk
Next, let’s narrow down where your risks are coming from. Every business will have its own unique mix.
These are some broad risk categories to consider:
- Supply chain disruptions
- Digital threats (cyberattacks, ransomware, etc.)
- Macroeconomic factors (recessions)
- Natural disasters
- Process failure
- Budget management
- Mail management
- Market competition
- Theft / sabotage / malicious actors
Once you’ve pinpointed the broader categories, start listing specific types of risks within those categories. If the likelihood or impact of a risk is clear, note it. If not, don’t worry — we’ll circle back to prioritization later.
Identify the best risk mitigation strategies
Risk mitigation refers to the actions, processes, and operational decisions an organization uses to reduce the chance of a risk materializing — or to lessen its impact.
It’s worth noting that there isn’t just one risk mitigation strategy for a given risk. Sometimes multiple options exist, and the best choice will depend on the nature of the risk and the specifics of your business.
Revisiting our example of lost or stolen mail, one risk mitigation strategy would be to step up the level of tracking and/or insurance on certain mail types, or using other services that guarantee more security than the USPS. Another strong solution is using a virtual business address and virtual mailbox to eliminate on-site physical mail processing.
Once you’ve identified the right risk mitigation strategies, you can begin building out the specific parts of your risk management plan. To help you get started, we’ve created a free template just for you.
[CTA] Download our risk management plan template to get started
Template - Stable - Risk Management Plan
5 Key components of a successful risk management plan
Now it’s time to document your risk management plan by incorporating what you’ve learned in this blog post so far and using our template as a starting point.
Here’s a look at five of the key components that a successful risk management plan should have. But this is just the beginning — be sure to expand and iterate based on your business, industry, and risk tolerance.
1. Risk management methodology
Your risk management methodology sets the framework for evaluating and documenting risks. So you’ll need to start by determining which methodology, or methodologies, you’ll use. This helps everyone involved understand the risk management structure and decision-making process, whether they’re building, approving, or executing the plan.
Some of the most common risk management methodologies are:
- Quantitative
- Qualitative
- Semi-quantitative
- Threat-based
- Vulnerability-based
- Asset-based
You can stick to one methodology or combine multiple strategies. But either way, it’s also helpful to outline how you’ll gather data within each chosen methodology.
2. Roles and responsibilities
You’ve heard it before: Everyone’s responsibility is no one’s responsibility. So an effective risk management plan should clearly define the specific tasks each person or team is responsible for.
Remember, your risk management processes guide people during high-stress or unusual situations. Don’t rely on the memory of others. Clearly communicate roles and responsibilities.
Here’s a short list of common roles to get you started:
- Risk owners: These are the people or teams responsible for specific risks.
- Stakeholders: Anyone with an interest in or impact on the work affected by the risk — this can also include leadership tied to the project.
- Subject matter experts (SME): When risk becomes reality, you’ll need specific expertise that might not be required day-to-day. List these experts by name so there’s no scrambling during a crisis.
- Communication managers: These are the individuals responsible for keeping everyone informed during an ongoing crisis or event.
In larger organizations, a dedicated risk management team might handle these roles. In smaller ones, you’ll typically divide up responsibilities based on who’s best positioned for a given role.
For example, people who work “near” the risk tend to make good risk owners and SMEs. Whereas communications or project management team members often have the big-picture perspective needed to serve as communication managers.
3. Risk register
A risk register is a chart or spreadsheet that tracks the potential threats you’ve identified. It usually provides a quick overview of known risks, a high-level response plan, and a list of associated roles and responsibilities.
You might include fields like:
- An identifier (usually a number)
- Risk description
- Risk impact (what project or area it will affect)
- Risk response
- Risk level
- Risk owner
The risk register is usually a short document. For example, the “risk response” field is often just a sentence. More lengthy response documentation can be valuable, but avoid stuffing it here if it doesn’t fit.
4. Risk assessment matrix
A risk assessment matrix is a different way of looking at the same risks you included on the risk register. Here, risks are mapped on a matrix to guide decision-making.
[Insert graphic example]
Typically, the x-axis represents potential impact, while the y-axis represents likelihood. Risks in the bottom left are the least likely and impactful, while those in the top right are the most likely and most severe.
Mapping out risks this way can clarify priorities and help you address risks differently depending on how likely and significant they might be.
Let’s take two mail-related risks:
- Significant mail disruption due to a natural disaster (high impact, low probability): While ongoing, widespread mail delays or disruptions might have a serious impact on your business operations, realistically, this risk is highly unlikely to happen. Most of the time, mail delivery resumes within days of a natural disaster.
- Overwhelmed internal mail processing systems lead to slower handling (low impact, high probability): This is extremely likely to happen at some point as your business grows, but it’s also not going to disrupt business operations overnight. You’ll have time to plan and implement new solutions like third-party mail management as problems start to arise.
By mapping out risks like these on a risk assessment matrix, you can direct your focus, time, and resources where they matter most.
5. Risk response plan
Your risk response plan is where the remaining details of your contingency plans go. It’s your step-by-step guide to reduce the chance of risks happening and your response roadmap if they do happen. It starts with “if X happens, our response strategy will be Y” and expands from there.
This is the most detailed part of your risk management plan and will take time and effort to develop. That’s why we recommend creating the risk assessment matrix first. This way, you’ll know which risks are significant enough to warrant a complete risk response plan.
Learn how to mitigate risks associated with business mail management
A well-crafted risk management plan is essential to prepare your business for potential challenges and minimize disruptions. You can protect your business by selecting a risk management methodology, assigning clear roles and responsibilities, and planning for possible risks. Tools like a risk register and assessment matrix will also equip you to prioritize and effectively respond to any issues that arise.
For businesses handling sensitive information, a secure virtual mailbox service is a great way to mitigate mail-related risks. With a SOC 2-compliant service provider like Stable, you can be confident that your mail is in safe hands and reduce the risk of impacts to business operations.
Keep learning about risk management: Read our post on risk mitigation strategies next!
