Inherent risk is present in every industry, every company and every workplace. These risks can affect the physical, mental and financial well-being of employees, as well as the future of the organization.
The nature of your company’s work may come with inherent risk. For instance, do you keep cash or high-value items on-premises? Do your employees work with heavy machinery, power tools or in dangerous environments such as underground or on roadways?
However, even human nature can come with inherent risks to your organization. Any time you bring together employees from different backgrounds, generations and genders, you risk harassment and discrimination. Humans also naturally want to work in their own best interest, which can lead to theft and fraud, ethics lapses and other misconduct.
A sloppy risk assessment puts employees in danger.
You need to stay organized in order to identify all potential hazards, their likelihood and their risk ratings. Our free risk matrix template and assessment form will help you stay on track.Get the Template
What is Inherent Risk?
Inherent risk is the risk that naturally exists in an environment. This is due to innate hazards of tools, equipment and other aspects of the workplace environment and processes.
Some inherent risk is easy to spot. For instance, working with sharp tools, heavy loads or electrical equipment comes with the risk of being cut, crushed or electrocuted. However, inherent risk isn’t just for health and safety hazards. Here are some examples of situations that could lead to other common workplace issues:
- Employees have financial need, your company uses or sells high-value goods = inherent risk of fraud
- You store records or data online = inherent risk of cybersecurity breach
- Employees have different personalities, people like to do what benefits them the most = inherent risk of harassment, misconduct and policy violations
Inherent Risk vs. Residual Risk
Residual risk exists after controls have been put in place, while inherent risk exists when no controls are present.
In other words, inherent risk is the risk that lies within people, processes and tools and could cause problems if not addressed. Residual risk is what’s left over after you take measures to reduce inherent risk.
There’s no way to completely eliminate workplace risk, but you should aim to lower it as much as possible. To do so, you need to find the right combination of control measures that will reduce risks as much as is reasonable (without creating new risks as a result).
Managing Inherent Risk with Case Management Software
Risk management is key to protecting employees and your company. Case management software streamlines the process so you identify and reduce inherent risk efficiently and effectively.
Spot Trends and Areas of Risk
The first step to risk management is knowing what those risks are. Identifying problem areas in your workplace can take hours of painstaking analysis. If you analyze incident data manually, you risk missing a key risk factor or putting too much or too little emphasis on one risk. Fortunately, case management software can help you spot issues faster and more accurately.
Using the trend analysis tool, you can create graphs, charts and heat maps that show your company’s areas of risk. Then, you’ll know where to focus your control measures, whether you’re implementing new programs or updating existing ones.
Analyze Organizational Health
Next, you need to identify your company’s risk management inefficiencies. These are the weak spots where you don’t control inherent risk as well as you should.
Using case management software, you can easily measure your organizational health as it relates to incidents and investigations. The software analyzes your case data to show:
- Average case resolution time
- Stages and steps where investigations stall out
- Case backlog
- Frequency of different incident types
- Frequency of total incidents
- Responsiveness to complaints and incidents
Case management software helps you find risks posed by employees, by the work environment and by your company’s polices and processes. Address all three to reduce inherent risk as much as possible.
Collaborate for a Complete Picture of Risk
Finally, collaboration across departments is key to identifying all sources of risk in your organization. Because they aren’t “in the trenches” every day, senior management might not know about risks employees face. As a result, they don’t always know the best controls to put in place or how to assess if those controls are working.
Case management software lets employees enterprise-wide work together for a more holistic view of inherent risk in your workplace. They can view and work on cases in one centralized, secure platform, eliminating information silos without sacrificing security.
Not sure if case management software is right for your organization? Download our free buyer’s guide to learn more about how it works.
Managing inherent risk is a critical function of prevention. The best risk management approach is to avoid incidents and issues in the first place.
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- Cheat Sheet