Saturday, August 8, 2015

Managing Risk Is Extremely Important for a Company

There's no question that the pace of business has increased. Many companies operate every hour of the day and across all borders. Assets can be distributed across the globe instantly. 

That changes the nature of risk substantially. Companies are not able to be complacent when it comes to risk. They must diligently manage it or it will quickly get away from them. Being resilient and ready against risk is what makes a proactive firm prosper in the global economy. 

Mitigate Risks Easily

Risks are always going to exist. There's no way to eliminate them all together. Sustainable businesses understand how to mitigate them so they're never pushed out of business by it. That comes from making a careful assessment on an ongoing basis. 

Monitoring the risks and then creating policies to deal with it is the basic idea. Assurance teams have to be agile and ready to move quickly when a new risk has been identified. It's not enough to wait around for risk to show up. 

By then it could already be too late. Getting out ahead of risks is always going to be the key to successful risk assurance. Companies that are able to do that retain profits and continue to operate.

Handle Major Risks That Could Cause Harm

There are risks that are so enormous they could result in the end of the firm. Fighting back against these types of risk is easier with the right technology. Mitigating risk also has the additional benefit of helping your company to find new opportunities for growth. 

If you're constantly monitoring current policies and systems for improvement, you're going to find ways to make even more money. Your entire enterprise has to be trained on how to assess risks on a transactional and department basis. They will keep coming at you quickly. It's debatable if you can stop all risks. 

Some would seem to be beyond the realm of control. Human factors can and do carry risk because of behaviour. Infrastructure, technological, and regulatory risks are sometimes out of the grasp of your firm.

Still, the goal of reducing all risks to minimal levels is going to be the ultimate goal of anyone who is responsible for managing risk. There's no question that the numbers can be managed, and profits can be made. There is always a danger of one-off litigation or a disaster, but those risks can be numerically scored.

You'll find that all major companies are relying heavily on assurance professionals. The field is growing and is unlikely to slow down. Risks are continuing to grow from every sector. 

Your team should be able to use your processes to keep ahead of the problems. Your employees can learn the correct way to keep risk at bay. Good luck with your assurance program.

Risk sources are more often identified and located not only in infrastructural or technological assets and tangible variables, but also in human factor variables, mental states and decision making. 

The interaction between human factors and tangible aspects of risk highlights the need to focus closely on human factors as one of the main drivers for risk management, a "change driver" that comes first of all from the need to know how humans perform in challenging environments and in face of risks. 

As the author describes, «it is an extremely hard task to be able to apply an objective and systematic self-observation, and to make a clear and decisive step from the level of the mere "sensation" that something is going wrong, to the clear understanding of how, when and where to act. 

Managing Risk

The truth of a problem or risk is often obfuscated by wrong or incomplete analyses, fake targets, perceptual illusions, unclear focusing, altered mental states, and lack of good communication and confrontation of risk management solutions with reliable partners. 

This makes the Human Factor aspect of Risk Management sometimes heavier than its tangible and technological counterpart.

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