Avoiding Disaster by Understanding Your Business Processes

In this article I will use the commercial credit approval process as an example of how to properly manage risk utilizing the fundamentals of process management. To begin understanding the risk inherent in your business it will be critical to first fully map the process the business undertakes to extend credit either long or short term to customers. Through this process it will be better understood who is making critical decisions, what those decisions are based on and where the potential failure points are. It is not necessarily the most obvious risks that undermine business operations. It is usually the less obvious and the easiest to overlook that create the greatest risk. It is the multitude of overlooked indicators that cause nuclear plant meltdown and not one catastrophic event. It is through this process that proper audit points, procedures and policies can be created. Process mapping also helps the organization understand proper staffing requirements and if the work flow is optimal to begin with.

Create a Roadmap for Implementation

From the initial work a full implementation roadmap can be constructed. It is important to note, however, that any quick fixes should be made as soon as possible. If obvious issues are identified, quickly raise those to the proper level of leadership and make corrections. This will stop the most egregious of errors from continuing and bring credibility to the effort in the early stages. The full roadmap should contain very specific information related to what the actions are, who owns the action and when they will be completed. Other important information will be how often teams will meet, management review schedules and how report outs will be formatted. As the team goes through the process it will be critical to frame recommended changes with data. Many changes, though potentially simple, will touch on policies that are policies of default and can be difficult to change. These changes can affect compensation, customer relationships and long established company practices.