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3 proper steps to communicating risk management

Risk management can seem imposing, but the pandemic times have shown just how important it is to be truthful and build trust.

Person on phone representing risk management

An organization must walk a fine line when it comes to communicating risk management. If they alert customers, partners, and vendors to every risk they face, notification fatigue may set in and cause real risks to be ignored. If a company tries to shield these groups from low-risk scenarios but issues arise, their lack of transparency and timeliness may damage trust and their brand’s reputation.

The good news is that there is some research to help guide businesses on how to communicate these risks. Back in the 1990s, researchers at Dartmouth created the “Drug Facts Box”, a way to help patients digest the risks of a particular medication and make better-informed decisions. While it was far from perfect, it was shown to help patients overall as compared to old, dense medication packaging. In fact, many of the same principles used in the “Drug Facts Box” can be applied to risk communications in general.

Reduce improvisation: Building out a standard process for communicating risks is crucial. Not only does it set reasonable expectations for stakeholders on how a particular situation will be handled, but it also reduces anxiety for customers around risk incidents. If a standard were adopted across all firms of a particular industry, it would benefit all those involved.

Adopt the right metrics and measure their success: While it may be tempting for organizations to limit negative publicity during a crisis, the real goal should be maintaining their customers’ trust. A company can achieve this by making sure customers have the right information about an incident to help inform their risk mitigation strategy. If customers feel that a firm has handled a particular risk situation competently and quickly, they are more willing to forgive the company and maintain a relationship with them.

Create a risk communication strategy from the start: The old adage of “Hope for the best, plan for the worst” applies well to this point. Although companies often design risk management strategies, many do not plan for how to communicate issues to customers or other stakeholders when issues arise. By designing the messaging and methods of communication from the outset, companies can quickly and effectively notify affected parties.

Patrick Auger is a management consultant and entrepreneur who resides in Austin, Texas. He has a Bachelor of Arts in Business Management from Western Illinois University, and is the Founder and Principal Consultant at Auger Consulting Group, LLC. When he's not writing for The American Genius, he's writing about the business of Mixed Martial Arts for The Body Lock or learning how to cook, one burnt recipe at a time.

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