Good risk management is important in PR planning
Many types of risk concerns have emerged more into our thinking in recent years. We are much more aware and concerned about the risks to ourselves, our organization and our community. Reflecting this, risk management is becoming an integral part of good communication practice.
Generally, there are considered to be main types of broad business risks:
- Strategic risks in the business and political environment
- Compliance risks – complying with rules and regulations
- Operating risks – events that severely disrupt operations, such as natural disasters, power supply, management complaisance or incompetence, cyber security attack, etc
- Financial risks – relating to the money flowing in and out of the business
- Reputational risks – a ‘soft’ term, but with major business implications.
Risk is defined as the chance of something happening that will have an impact on objectives. Risk is measured in terms of likelihood and impact. Some people think public relations practice doesn’t involve much risk, which they think is more about operational matters such as safety and security.
However, there is an element of risk in all public relations activity. Think of the risks to the organization inherent in a bad reputation, in controversial public issues, corporate crises, sponsorships turning bad, poor counsel to senior management, hyped product claims in marketing communication, use of celebrities in marketing, and in corporate events that go wrong. Many risk management experts believe that reputational risk is one of the most important – a PR risk that has major dollar value.
International political changes are obvious examples of business risks. The UK decision to leave the European Union, terrorism activity, and incoming US administration in 2016 all represent sudden, unforeseen risks creating potential disaster. And who would have foreseen the US President being a frequent liar?
In addition to the potential risks in public relations activities, risks are prevalent in all areas of corporate life. We should be alert to these because communication may be needed to address internal and external corporate and operational risks.
Key benefits from risk management:
- It reduces the likelihood of unpleasant and costly surprises.
- It provides better information for strategic planning and decision-making.
- It leads to more realistic allocation of resources, especially financial resources.
- It generates better results from communication programs and projects.
- It creates better compliance with regulatory requirements.
- It helps to more accurately define the scope of required insurance cover, which can lower insurance costs.
Risk management comprises the culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects. The role of risk management is to identify potential risks and take action to reduce the chances of those risks becoming reality and to reduce the magnitude of incidents if risks do turn into reality. Note also that the risk management process can identify potential opportunities from risk, just as issues and crises can create opportunities as well as problems.
In simple terms, risk management is intended to answer three questions:
- What can go wrong?
- What is the likelihood and impact of something going wrong?
- What can we do about it?
Risk management should be a continuing process starting at the planning stage of all significant communication and public relations programs and projects.
Seven steps are commonly used for risk management:
- Establish the context.
- Identify the risks.
- Analyze the risks.
- Evaluate the risks.
- Treat the risks.
- Monitor and review.
- Communicate and consult.