Risk management is key to the successful operation of any profession or business organisation. Risk is constant and cannot be ignored or wished away. Risk must be managed.
Managing risk is an essential part of all professions. All professional and business activity involves a degree of risk. It is a vital element of professional duty to be alert to the risks that exist, and to minimise them to the greatest degree possible. However, risk cannot be eliminated entirely and the risk involved in any endeavour need to be carefully gauged. The alternative would be to do nothing because of the risk involved and this in itself would engender further and perhaps more serious risks. For example, a professional practice that refuses to engage with many new business opportunities because of the heightened risk involved, could find in time that the practice was failing because it was not developing new capabilities.
This article on risk management and improvement outlines the essential elements of risk management, and how the management or risk needs to become part of organisational processes. The universality of risk in organisational life is considered, and the many kinds of risk that exist. Key areas of risk are highlighted and the wide scope of internal and external risks. How to identify risks is considered, and the consequences of ignoring risks illustrated.
While many of the experiences of risk management from which the following material is drawn come from corporate experience, there are many reasons why the same insights and risk management routines apply to professional firms and businesses. Firstly, many professional firms are very large, are global and are incorporated, some even stock exchange listed. Increasingly, the management of risks involved in their work and enterprise are parallel with industrial and financial firms. Second, while once professionals and their associations were self-regulating and had an ethos of autonomy, many professions are now subject to extensive regulatory regimes. In this way too, the regulatory or legal risk of professional firms and individuals, is little different to those of non-professionals. Third, even if professional firms are small or sole practices, understanding and managing professional and business risks, gives a more sustainable outcome for clients, the proprietors and the future of a professional practice. Finally, occupations (some in the financial sector) see professions and greater professionalism as a standard of conduct and competence to aspire to. For the reasons elaborated below, this should include robust and appropriate risk management, including in relation to the ethics which distinguish a profession, or should do so.