5 Most Crucial Organizational Risks You Need To Know

by | Oct 24, 2017 | Blog |

In business, it’s easy to focus on external risks. Watching what the competition is doing, new companies gaining traction, and changes in clients’ or customers’ expectations are all valuable and important pieces of knowledge for your business. However, many companies make the mistake of ignoring internal risks within the company that can be just as damaging. These organizational risks are often hidden and difficult to spot until it’s too late, unless you know what you’re looking for. In this article, you’ll learn about the top five most crucial organizational risks facing companies today and how to address them.

1. Lack of Communication and Integration

The biggest organizational risk facing companies today is a lack of communication and integration between teams. According to a report from Carnegie Mellon, the free flow of information throughout your organization allows employees to understand where they fit in the overall picture of the organization, instead of forcing each job into a silo. When you share information, it makes your workforce more flexible, since they can cross-train, collaborate, and gain new perspectives on how the company works. Good communication policy encourages your workers to pursue depth of expertise in their role and breadth of knowledge in how that role collaborates with other areas of the company.

2. Prioritizing Rules Over Dialogue

According to the Harvard Business Review, one of the key failings of BP prior to the Deepwater Horizon disaster was prioritizing safety rules, at the expense of dialogue. Workers throughout BP were given strict guidelines about how to perform their job safely, and those guidelines were immutable. In turn, employees became less inclined to talk with their supervisors about risks. Good companies focus on providing opportunities for dialogue, using guiding principles, not rules, to run the company.

3. Cyber and Information Systems Compromises

Of course, companies are thinking about cyber attacks from outside the organization. However, your information systems network is only as strong as the practices of each of the company’s employees. In order to protect private information, make sure your employees understand the best practices for cybersecurity and why it’s important that they follow them. Chron found that poor internal cybersecurity controls was one of the biggest organizational risks companies face.

4. Not Looking to the Future

It’s easy to get caught up in the news of the moment and all the current goings on in your industry. When company leadership gets too myopic in their view of the marketplace, however, it becomes a risk for the company. Most successful companies of the past decade operate on long-term planning models that include predictive analytics, digital trends research, and geopolitical forecasting to influence business decisions. Looking to the future is a key component of being an agile, responsive organization.

5. Risk Aversion

A recent report from McKinsey found that one critical organizational risk was not taking enough risks. Risk is an essential part of business, and companies that don’t take on risk in the digital age get left behind. Simply hiding from the changing marketplace and continuing with business, as usual, is one of the worst ways businesses can deal with change.

Top Organizational Risks to Look Out for

It’s worth conducting a thorough audit of your internal practices to identify these organizational risks within your company. The dangers of these risks can be catastrophic, but the benefits to resolving them are numerous. Increasing communication, dialogue, and forward thinking will make your company more resilient in the face of challenges and more agile to profit from changing conditions.

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