No one enters business to focus on the downside. Business is all about growing the upside, winning new projects, landing new customers, expanding skills and operations, hitting profit and revenue projections, and building an even greater upside. How does something like risk fit into this scenario?

One of risk management’s greatest unsung benefits is the increased competitive edge it gives businesses. With risks identified, and either avoided or mitigated, companies can focus more resources, time, and decision-making manpower on identifying and assessing opportunities in the marketplace. The business can be more responsive to requests for proposals or the opening of new accounts. With added time and the security of knowing risks have been handled, owners and salespeople can focus on better understanding how to respond to specific opportunities. This enables the business to grow and thrive.

One of the ways in which risk can aid competitiveness is through improved pricing. How? Companies can create different price categories for different types of customers or products, based upon the level of risk they entail. This can ensure that the company is adequately compensated for higher risk (which will cost more to manage and mitigate) and can select or target customers with profiles aligned with the company’s risk appetite. Banks, finance agencies, and insurance companies that target high-risk customers use this approach.

By being able to assess risk more formally on the upside, as well as the downside, companies can better understand where and how they are achieving returns. They can accurately project how much return is needed to support the risk they are taking as part of a business growth operation. Potentially, it is far better to spend money mitigating the effect of a known risk than paying to clean up the damage of an unknown risk after it hits!

A very successful money-making product might seem attractive. However, when you compare its profit-making potential to the risk it entails, the product is often less attractive. For instance, you might have a great idea for a new product, but if the materials are difficult to source or the manufacturing is very complex and requires specialized personnel, the product may become less financially attractive.

When risk is factored into business planning and operation, the business tends to becomes more efficient and provide higher-quality products and services. Resources, time, and better process monitoring techniques can be applied to making better products or improving customer interactions—all part of the risk associated with growing the business. The company can use its resources more widely, thanks to research it has done on the risks associated with each candidate. Most of all, in a stable business environment with few sudden interruptions caused by unforeseen problems, the company can focus on quality. In business, quality products are synonymous with stable operations.

One of the greatest upsides of risk management is its ability to increase quality communication in the workplace. Company-wide knowledge of the business’s risk management strategy generates company-wide communication. This communication helps everyone understand the issues in the same way and enhances further insight through informed problem-solving.

Here’s an example. A new accounting program has identified cost “leaks” from invoicing overcharges that have been hampering the company’s expansion plans. The accounting department notifies the owner, executives, assembly-line foreman, and sales manager, all of whom deal with the items on the invoices, the invoices, or the vendors. The involved parties discuss the solution, implement it with all invoices in accounts payable, and solve the problem. They are also all on the same page when dealing with the surcharging vendors and strike better deals for products, improving the bottom line and their upside.

Such discussion also tends to improve understanding of the risk management process and its benefits to the company. This leads to greater implementation of the risk strategy throughout the company, better protection for executives and directors, and a strong inside-out communication pipeline between internal and external stakeholders.

When risk is being managed at a company, and the rank-and-file know it, employees feel a greater sense of security. When workers know that the company leadership is looking out for pitfalls, their confidence in the company and their jobs within the company grows. Employees may also feel empowered to improve their skills for managing risk issues that come up in their own departments and to learn more about how management is dealing with issues. This increases their confidence even more, creating a stronger and more dedicated workforce.

A company that carries out well-crafted risk policies also tends to enjoy smoother processes, stronger workplace practices, and other features of a robust company. This is the “proof in the pudding” of risk management. People feel pride in being part of a better-managed operation, where the equipment isn’t breaking down all the time and where the system works.