Risk Management

What's Risk Management?

I walked into the interview room still trying to understand what risk management within the corporate setting was all about. Despite knowing what the words risk and management meant separately, I did not seem to grasp the actual meaning of risk management within a corporate setting. I was interviewing for a position in a risk management consultancy firm. I confidently walked into the interview room determined to get the job.

“What does risk management mean?” asked the interviewer after pleasantries and academic background questions among others. Well, the research I had done on risk management seemed to instantly vanish when I needed it most. I do not recall what my answer was exactly but it was not entirely correct. Thankfully, I got the job and got to learn and apply risk management principles.

I quickly realized that most of the clients I worked with did not know what risk management was either. Risk Management is a field that I am passionate about. Partly because I have to work with people to help them manage the risks they face in running their daily business processes. But mainly because the goal of risk management is to ensure achievement of the goals and objectives set for a business or an organization. We apply risk management in our everyday activities and in life in general. When you ensure that you have locked the door at night, you have managed the risk of a thief breaking into your house while you sleep.

When it comes to running your business, you have in some ways been managing risks without thinking about it in the concept of risk management. Perhaps you are meeting a potential client for the first time. Your goal is to expand your client base and to do that one of the things you need to do is create a good impression. If you are running late, you might choose to skip breakfast to get to the meeting on time. The risk here is being late for the meeting. You mitigate this risk by skipping breakfast. You have therefore managed risk. While we sub consciously apply risk management as we run our businesses, it is important to have a risk management plan in place. This is because many risks that could potentially happen go unnoticed. We are not aware of them or we think that they will not happen to us but once they occur, they leave a lasting negative impact. At any one point you should know what the top risks your business faces are.

Risk management is a deliberate ongoing process that involves identifying the risks that could potentially occur and affect your business. After risk identification, one has to analyze the risks in order to classify them and focus on managing the key risks. The risk could be as simple as late delivery of an order yet it could have a big impact. If you run a bakery, late delivery of a wedding cake could be a risk that might have a negative impact on positive word of mouth advertizing yet word of mouth advertizing is critical to a small business. If you run a catering business, what measures have you put in place to prevent a food poisoning incident from happening?

So, do you have a risk register for your business? You should have one in order to either prevent risks from occurring or to be well prepared in case a risk occurs by minimizing its impact.

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Sophia KimaniBy Sophia Kimani.

Risk & Compliance Consultant.

Email address: This email address is being protected from spambots. You need JavaScript enabled to view it.


Karuturi workers block South Moi Road, in Naivasha, Kenya, demanding their wages (Feb 2014)

What You Should Know if You Employ Casual Workers

A manufacturing firm was in the habit of recruiting casual employees because of their often increasing workload. Although it had a number of employees, most of their work needed support from casuals on a daily basis. And so for five years, the company would engage approximately 50 casuals daily. The organization was able to automate its process and so they decided to do away with the casuals because of the new system. The newly-acquired machine was able to manage the counting and packing of their items, and as a result rendering the casual staff redundant.

The casuals reported the matter to the industrial court and the company was sued for approximately Kshs.600, 000 for redundancy compensation. The staff also claimed 21 leave days per year, one rest day per week for the years worked and adjustments of their salaries as per the yearly salary increments gazetted by the government.

I was asked to represent the company at the labour office, and this was my first time to undertake such services. I went to the reception and found approximately 20 men seated, but the labour officer who was mediating over the matter was not in the office and so we had to wait for him. Ten minutes passed and I decided to speak to a staff at the office. I stood up and walked towards the door but about five men rushed to the door to block the entrance and ensure that I do not leave the building. This is when I realised that they were the aggrieved party.

Most organizations assume that if they do not give an employee a contract of employment then they are not bound by the Employment Act. However, the employment contract can either be written or unwritten. During the mediation process at the industrial court, the casuals expressed their frustration with the organisation and only asked to be paid what was due to them as per the Employment Act.

So as to mitigate the exposure the following is suggested:

  1. If some specified work cannot be completed within three months, then the contract should be in writing.
  2. If the casual performs work which cannot reasonably be expected to be completed within three months or more then the contract is automatically converted from casual employment to a term contract. The employee is therefore entitled to terms and conditions indicated in the Employment Act.
  3. Various salary adjustments are made on Labour Day for various industries and occupations. Ensure that you buy the gazette notice or have access to the Kenya Law website [http://kenyalaw.org] to avoid exposure.
  4. If you do not have a human resource staff/practitioner, seek advice from a professional before you terminate the services of an employee.

Back to the court case, since the casual employees were being paid daily it was an uphill task for both parties to prove that they had indeed worked for the organisation for the period they were claiming. The casuals did not pursue the case any further. 

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Susan Awuor

Susan Awuor

Trainer and Recruiter

Tandem Consultants

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