The approach to consistent business risk and control management has to start with a very careful analysis of the overall risk environment of the operations. It remains difficult to split generic environmental risk evaluation from the detailed operational risk assessment as such. The key factors for the analysis are the following:
a) Market Risk: The market risks evaluate the risk derived from the overall legal circumstances of the market. This includes local policies and guidelines as much as the political and economic situation.
b) Operational Risk: The operational risk describes the risk derived from the business operations like the products & services, delivery model, supply chain, human resources, facilities, material and equipment as well as logistics
c) Management Risk: The management risk is based on the evaluation of the leadership team in the organization. This can include the senior as well as middle and lower management.
For all of the above an organization can develop a framework to consistently rate their individual organizations, beyond traditionally available country risk ratings. The evaluation of the business risk and control environment also determines the level of sophistication and control required for the business risk and control management implementation for this entity. Considering a holding has a set of fixed global guidelines the implementation model in a market with high market, operational and management risks may be entirely different than in a market with low market, operational and management risk. Furthermore the approach might be different even if there are just differences in the management risk (for example providing more managerial oversight or internal audits), operational risk (building more controls or high frequencies of verifications) or market risk (determining the staffing or financial investment / reserve of an operation).
The Business Risk & Control Management Solution from digital-media-lab allows the consistent evaluation of different risk environment as well as the administration of global, regional and local policies and guidelines. The thorough analysis of the risk environment allows immediate visibility on high risk areas and prioritizations within larger organizations. The central management of guidelines and policies furthermore simplifies administration, communication, distribution and training of centrally developed control structures.
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