Why Incident Management is an Essential Part of Risk Management

In any operation or activity, unforeseen happenings can derail progress. The job of a good manager is to try their best to make the hitherto unforeseen visible and planned for. It’s all too easy to find yourself reacting to occurrences that can throw you and the company into turmoil, with frantic fixing on the back foot being the result. 

The best managers can make it look like they don’t do much. This is because their planning is so good that they don’t have to do the constant firefighting that some can find themselves consumed by. This calmer and more collected school of management is exemplified by incident management. We’ll look at what it is and what it can contribute to your business risk management plan. 

What is Incident Management?

Incident management is a way of coping with the many and varied problems that continuously afflict most organizations. 

An incident is defined as any development that will negatively impact the employees and customers of an organization. It can range from something as trivial as a display breakdown to a full IT outage. Think of cybersecurity breaches, breakdowns during production, or even downed servers. The effects an incident can have on your operations can be far-reaching, especially without the proper management plan in place. 

There are two main components to incident management. 

1. Foreseeing oncoming happenings in good time

Any well-run organization needs to be able to detect impacting events long before they’ve had a chance to take effect. The parts of the organization that are charged with this vigilance are usually shielded from the trivial day-to-day snags that can crop up in all operations, regardless of foresight. 

To take financial incidents as an example, it’s important that where disclosure requirements are likely to be changed, anyone charged with staying on top of changes is able to devote time and attention to incoming developments in such areas as SOX requirements for auditors rather than thinking solely about the current framework. 

2. Having response routines to deal with difficulties

So, the onrushing problem has been spotted. There now has to be in place a series of incident response plans that are deployed, from threat triaging right through to follow-up analysis. 

These threats might never have impacted before now, but they remain a likelihood that must be planned for, so there may need to be some abstraction. This can then be improved upon when it comes to post-event analysis.

The aim is to avoid having to respond on the hoof. Such reflex responses can be expensive and counter-productive. Much better to have tried and tested, but still flexible, responses that can be put in place regardless of personnel changes. 

These response routines can also be applied to specific areas of the organization, such as machine & tools management. By having tried and tested responses in place, the team responsible for maintaining and repairing machinery can quickly handle incidents that can impact the organization’s operations. This level of preparedness can help reduce the risks associated with machinery breakdowns, ensuring that the company can continue to operate smoothly.

What is Risk Management?

It’s tempting to think that risk management and incident management are effectively the same. Not so. Risk management is a holistic awareness of all the elements of fortune that may affect an organization. The key factor here is that it paints a picture of risk so that the senior management can learn which risks are worth taking and which are not.

So, risk management is not about alleviating all risks. Such a policy would be doomed to failure. It’s about reducing the risks you can but looking at unavoidable risks and deciding whether they’re the kind and size of risk that the company can and should be undergoing to reap the potential reward. 

Take cyber security. A thorough IT security audit checklist can be deployed to enhance security for software or protocol so as many risk factors as possible can be allowed for. However, there will always be a residual risk where human factors are at play.

A comprehensive risk management strategy will take these on board and decide whether the activity being considered is worth pressing ahead, should be replaced, perhaps with an automated function, or even avoided entirely.

How Can Incident Management Contribute to Risk Management?

There are two main ways that risk management can benefit from incident management. 

1. Categorizing threat

Part of incident management is the triaging of threats so that an appropriate response can be applied. Numerous variables are factored into the analysis, including urgency, impact level, time period, and the resulting priority level.

Suppose an oncoming incident is deemed to have an impact level that outweighs any possible benefit of working to accommodate the incident. In that case, risk management can decide that it’s better to avoid it altogether.

2. Rapid communication

Part of incident management is working to handle incidents in a timely fashion. A crucial part of this effort is using rapid communication tools like alert management software and mass notification tools that spread awareness of threats with all due urgency.

The alert management tools used in this endeavor will usually alert all stakeholders (on-call teams, etc.) on their mobile phones, mobilizing them into action right away. The designing and rehearsal of these information networks can be part of the routines that incident management seeks to put in place. In parallel, mass notification systems can be deployed to notify the public when an incident is deemed to have an immediate threat to life or property.

For instance, the UK trialed its emergency alert system on Sunday, 22nd April 2023. It’s a system designed to alert mobile phone owners to the presence of a threat, whether from extreme weather or from an attack.  

It’s important that this be thought about ahead of time and tested to iron out any glitches so that this incident management system is functioning well should the need arise.

The risk management outlook can then factor this incident management tool into its calculations regarding the risk posed to the country’s citizens.  

By ensuring that all involved parties are quickly brought up to speed on matters, incident management can enable risk management to classify a possible event as one that has been planned for by enabling rapid response. This means that the incident’s risk of being too severe to handle has been reduced.

Risk is Everywhere

At the risk of sounding a little pessimistic, the reality is that seeking to live risk-free is almost an impossible dream. For what it’s worth, it might make for a pretty dull existence too. Risk gives life an element of excitement and—managed well—can deliver solid boosts to the organization that calibrates risk and benefit well. 

One of the best ways to make risk your friend is to ensure you have the vigilance to appraise oncoming threats and the plans in place to cope with them when they impact. This is what incident management is. Fundamentally, it’s a way of arming your business so it can handle events. The risk of the whole thing coming asunder is then reduced.