Procedures are important for a variety of business activities. For example, a business might have a procedure to follow for addressing negative media treatment; or a business may have procedures to follow for safe production practices in a factory. Whatever the reason for procedures, there are a variety of risks that accompany a lack of procedures.
For certain crises, a procedure can be essential in allowing the organization to act quickly and decisively. During a crisis, the stress and time constraints involved can hinder effective judgment, causing responses to actually worsen a crisis. If a procedure is in place to manage certain events, the decision makers can follow a preconceived procedure and more calmly address the problem.
Another risk of a lack of procedures is the chance that destructive conflict can arise during certain situations. If there is no procedure in place to deal with an unexpected event, stakeholders may argue over the proper course of action. However, if there are procedures in place that were previously agreed upon, conflict is much less likely to occur because there is an objective course of action already in place.
For many businesses, there can be a risk of infighting when a key individual leaves the organization. This is particularly true for small, closely held companies when the founder leaves. Succession disputes can lead to legal battles that can be costly and destructive for small companies. If there is a process in place for determining successors, however, replacing a key member of a company can go much more smoothly.
Legally, a company can be at risk of not having processes in place for certain activities if a legal problem arises. For example, if an employee is injured working in a factory, the company may be sued by the injured individual. If, on the other hand, there was a well known and reinforced process in place that the injured employee did not follow which resulted in the injury, the company may be able to avoid costly legal liability.