Risk Assessment of Key Accounts during COVID-19 pandemic
We’re in a global crisis that’s unlike anything we’ve seen or could have ever expected. All organizations are facing an unprecedented level of risk that requires timely action. “Predicting the unpredictable: dealing with risk and uncertainty” has always been a key mantra, and this holds true today with the emergence of COVID-19. As an Account Manager, you are best placed to provide new insights to top management regarding the impact on your organization’s existing business and opportunity landscape. The impact on annual plans and account plan goals should be on your organization’s radar now to allow them to take these into consideration when making decisions.
This is a time of rapid change. Drastic ad hoc actions are taken to address challenges to the business environment. Ad hoc strategic actions pose major risks and the evaluation of risk with each action is critical. The four keywords to keep in mind to manage risk during this crisis are mitigate, transfer, avoid, and accept.
The first step to managing business risks is to identify what situations pose a risk to your finances. Consider the damage a risk could have on your business. Once you have a list of potential business risks, develop a process to weigh the severity it possesses for the key account. Set up a scoring system for risks, from acceptable to undesirable. Look at the likelihood of the identified risks occurring at your business. Gauge the financial impact the risk could potentially cause.
Risk Assessment Framework
1. Risk Matrix
A risk matrix helps you prioritize business risks by ranking the potential impact and likelihood for each account. Color coding helps visualize accounts based on their risk rankings, and you can also designate zones in your matrix as generally acceptable (GA), as low as reasonably possible (ALARP), and generally unacceptable (GU) to create an at-a-glance view of which key accounts to prioritize.
2. Risk Rating Key
A rating key enables you to visualize risk rankings and designate the GA, ALARP, and GU zones. The rating key also suggests the preferred action for each of the 3 zones.
|1 & 2||Low||GA
|Accept the Risk|
|3 & 4||Medium||ALARP
As Low As Reasonably Possible
|6 & 9||High||GU
3. Risk Zones
- Generally Acceptable (GA): In the area of the chart ranked “low,” risks have little impact and/or are unlikely to occur. Risks in this region don’t pose an immediate threat to the project or organization, and some can even be ignored.
- As Low As Reasonably Possible (ALARP): This is a zone of acceptable risk, encompassing the “medium” ranking areas. Risks falling within this region of the matrix are tolerable or not significantly damaging; work can proceed without addressing these risks being immediate.
- Generally Unacceptable (GU): This is the area of the chart where risk is “high”. Risks in this region are quite damaging, highly likely to occur, and would threaten the project or organization. They are the highest priority, and you must address them immediately.
5. Financial Impact
The total financial impact of the risks across your organization categorized by the zones and by the severity to re-evaluate the guidance numbers for the entire organization.
6. Risk Response Plan
The account manager can plan for managing the risk(s) (Avoid / Transfer / Mitigate / Accept) for the key account management. Action items for the same can be planned. Support required from peers, partners, or third parties can be highlighted timely, acted upon, and followed up.
Your business risk assessment is not a one-time commitment. Review risk management processes periodically to see how you handle risks. Also, look out for new risks that might not have been relevant in the previous assessment of the key accounts.
This simple risk analysis will help you avoid hazards that could damage your finances. The risk assessment of key accounts informs you about the steps you need to take to protect your business. You can see what situations you need to address and avoid.