What is the difference between “Risk Management” and “Crisis Management”? What you need to know for effective risk management

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imageThe words “risk management” and “crisis management” have a similar sound. It is often confused because it is often used in similar contexts. However, in fact, risk management and crisis management have different targets to manage. This article explains the difference between risk management and crisis management.

With crisis management

Crisis management is “managing the situation so that the situation won’t get worse with regard to the trouble that has already occurred.”

For example, it is crisis management to quickly evacuate employees to a safe place when an earthquake occurs. In the business scene, crisis management also includes handling when there is a defect in the product sold, and handling when the account operated by your company has been heated up.

Crisis management is required to get out of the negative phase and quickly return to normal times.

Crisis management is required to get out of the negative phase and quickly return to normal times.

Risk management (hereinafter referred to as risk management) can be defined as “an activity to prepare for possible crisis / danger.”

In the previous example, risk management is to conduct evacuation drills in preparation for the occurrence of an earthquake, or to store emergency supplies. In addition, it is also part of risk management to manualize the measures to be taken when problems such as the outflow of defective products and the SNS fire occur, and to secure personnel for measures in advance.

If crisis management is “response to a situation that has already happened”, then risk management can be said to “prepare for a situation that has not happened yet.”

Of course, it is impossible to prepare for all possible risks in the future, so it is necessary to give priority to work on risk management after comprehensively evaluating the possibility of occurrence and the impact if it actually occurs. There is. In addition to preparing for individual risks, it is one risk management to have an internal system that can move quickly and flexibly whatever risks are manifested.

Why is risk management focused now?

Crisis management and risk management are both important activities, but in recent years, risk management has attracted particular attention.

The world situation is changing at a rapid pace, and the domestic market is shrinking day by day. In order to overcome the current situation in this tough market, it is essential that we always keep an eye on the surrounding situation, make quick and optimal decisions every time, and move forward.

A crisis is inherent in business, but it is not possible at the very least if you were thinking about countermeasures after the crisis. Therefore, “Risk management” is emphasized to predict possible risks and to move quickly in case of emergency to minimize damage.

“If you have it, you won’t get ugly”

There may be many Japanese companies who are in danger of shrinking their domestic market due to recession or declining birthrate. In order to continue to grow as a company, the need to embark on an “adventure”, such as launching a new business or entering an overseas market, is increasing, and the importance of risk management is expected to increase in the future. There is a word, “If you have prepared, there is no ugly,” but by preparing for the risk, you will be freed up your mind to challenge your “adventure”. First of all, how about trying risk management from a familiar place?