The Advantages of Implementing Risk Management in Organizations


In the work of organizations in any sphere of human activity, unexpected circumstances may arise that may put it at various kinds of risk. Ensuring the avoidance of such cases in the company is engaged in implementing risk management strategies and approaches. This aspect includes exceptional managers and teams who analyze external and internal factors and group the information received. Further, these professionals will form reports to provide to the company’s managers. Based on the data obtained, the organization can form a risk-averse policy. Among the advantages of implementing risk management are ensuring the company’s productivity, limiting unexpected events, and improving communication between employees. A significant positive aspect is preserving the reputation and loyalty of consumers and ensuring the safety of employees. To obtain the necessary information, this study used authentic and relevant sources. It was concluded that there are numerous advantages of implementing risk management strategies in the organization.

Risk Management in Organisations

The work of any organization can have both positive and negative aspects. Thus, the latter is particularly dangerous, as they can have a negative impact on the productivity of the company, the relationship between employees, and its competitiveness. Thus, this scientific paper aims to study the importance of risk management and how it can have a positive impact on the organization. Among the advantages of implementing risk control and prevention strategies are the provision of profit, a safe environment, and limiting the possible occurrence of unforeseen situations.

First of all, before starting to discuss the benefits of risk management for an organization, it is necessary to gain an understanding of this topic. Thus, sources define the phenomenon under study as “the process which aims to help organizations understand, evaluate and take action on all their risks” (Hopkin, 2018, p. 43). In other words, it is a strategy that aims to increase the possibility of gaining success among competitors and reduce the possibility of failure. Of particular importance in this process are risk managers who coordinate the correctness of the implementation of strategies. Moreover, among their duties is the dissemination of awareness of the need to limit dangerous conditions for the company among its employees.

Thus, the main task of risk management is to ensure that the organization will be able to respond promptly to possible negative factors. At the same time, the primary condition is the preservation of its competitive place and not incurring losses (Saeidi et al., 2019). Another valuable aspect of the phenomenon under study is that, with the proper assessment, the company can make a decision not to limit the risk but to accept it. Thus, the organization can take advantage and only benefit from this step.

An essential step in managing undesirable situations is the development of an action plan. The main person in it becomes a risk manager who, with the help of specialized workers, collects the necessary information. Based on the data obtained, such a way of functioning for the company will be formed, which will provide only positive results. Moreover, knowing what a business can expect in the future can help in making informed decisions and creating a safe workplace environment. Thus, another advantage of applying risk management is to reduce legal liabilities, significantly improve corporate social responsibility indicators and ensure the protection of employees.

Therefore, it is necessary to begin a more detailed consideration of the benefits that risk management provides for the organization and its employees. First, it is the dissemination of awareness and understanding that risk is an inevitable part of the functioning of the company. Moreover, in this case, there is a consideration of the fact that the risk may be unexpected. In this case, the organization should be fully prepared to take the necessary actions to reduce possible negative consequences. This aspect can be provided under the condition of mutual collaboration between the risk manager and representatives or managers of the organization. As already mentioned, monitoring and the assumption of possible risks can provide assistance in the formation of a safer place for workers. This is due to the fact that the staff is an integral part of the organization. This fact can also be supplemented by the fact that providing comfort and safety for customers and company staff will help improve performance.

Another advantage that can be highlighted is the provision of an opportunity to conduct successful activities for the company. This factor is since the identification of possible failures occurs at the initial stage of decision-making or the introduction of new strategies. Thus, the organization is ready in advance to take action in the event of undesirable circumstances. At the same time, the company also does not lose such a crucial resource as time since it already knows how to act. From this aspect, such a benefit as avoiding unexpected events can also be derived. Thus, the risk manager provides a list of what the company can expect. Based on the proposed information, the business forms an approach to work that will minimize risks.

Preventing the occurrence of risks, among other things, leads to an increase in the financial profit of the organization. This is supported by the fact that if adverse factors are avoided, the company can save money and resources that can be spent on solving the problem that has arisen. Risk managers contribute to this aspect by analyzing trends and patterns to determine what can increase the risk of a threat (Baba Ahmed & Megnounif, 2020). This has a positive effect on reducing the results of a collision with stressful situations.

In addition to financial resources, risk management is also functional, as it helps the organization save time and effort. This can be provided on the condition that the company will maintain accounting records, which will then be transferred to risk managers. In it, I will provide data on what the staff is facing, which will also contribute to improving the work. Subsequently, recommendations on optimal operation will be formed from the information received without harm to both the organization itself and its employees.

A precious component of the company’s functioning is its employees and how their communication is built. The positive side of good interaction between employees can significantly improve organizational culture (Pathiranage, 2019). Moreover, it plays a vital role in shaping the relationships of all individuals involved in the process. It is worth noting that risk management if successfully applied, can provide an understanding of internal and external issues for even greater team cohesion within the organization. Thus, there is a significant advance in the formation of vertical communication (Walden et al., 2017). This process occurs due to the formation of realistic expectations and the linking of data with the goals and mission of the organization.

Another particularly critical aspect for an organization that directly affects its productivity indicators is the preservation of reputation. Hence, there may be a risk that will put the company’s image in doubt or alienation, which can dramatically reduce people’s loyalty. In addition, a degraded reputation can also deprive investors of the desire to invest in a company and lower the organization in the rating in the selected market. Therefore, the aim of a risk manager is to create plans that will reduce the probability of negative consequences.

Another aspect that requires attention in this research paper is the relationship between risk management and the culture of the organization. As already mentioned, a well-built plan to limit risk factors has a positive effect on the organizational culture of the company. Moreover, there is a strengthening of relations within the company, also by building standard views on work. In other words, the organization develops a common worldview of how the actions of employees can turn into a positive performance and create a positive image in the eyes of the public.


In conclusion, this work aimed to consider how a correct and well-chosen risk management plan can have a positive impact on the company’s activities. Furthermore, among the advantages of the studied aspect is the reduction of the occurrence of undesirable situations, the preservation of temporary and financial resources, and ensuring the safety of employees and the organization itself. In addition, awareness of risk management and its positive aspects can help form a closer team that improves the company’s performance indicators.


Baba Ahmed, A. N., & Megnounif, A. (2020). The impact of risk management on business performance: Case of Algerian construction organizations. Innovative Infrastructure Solutions, 5(3), 1-16. Web.

Hopkin, P. (2018). Fundamentals of risk management: Understanding, evaluating and implementing effective risk management. Kogan Page Publishers.

Pathiranage, J. (2019). Organizational culture and business performance: An empirical study. International Journal of Economics and Management, 24(2), 264-278. Web.

Saeidi, P., Saeidi, S. P., Sofian, S., Saeidi, S. P., Nilashi, M., & Mardani, A. (2019). The impact of enterprise risk management on competitive advantage by moderating role of information technology. Computer Standards & Interfaces, 63, 67-82. Web.

Walden, J., Jung, E. H., & Westerman, C. Y. (2017). Employee communication, job engagement, and organizational commitment: A study of members of the Millennial Generation. Journal of Public Relations Research, 29(2-3), 73-89. Web.

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