Sunday, 24 February 2013

Institutionalize "Governance, Risk management and Compliance"


Assessing the various parameters of risk is crucial for any business. Business risk assessment will bring in to play all those factors that can potentially damage and harm your organizational structure and functioning. In order for a business’s risk management function to remain in sync with all that is happening, an efficient risk management program becomes extremely necessary.



The risk assessment matrix
The various factors that can hit a company’s normal functioning include operational risk, location risk, financial and human risk. These factors need to be constantly monitored so that any sign of trouble can be dealt with. 
For example, operational risk management may take into consideration, factors such as glitches in production, the dissatisfaction of clients and any problems related to the brand’s reputation. Similarly financial risk management will include factors such as risks related to pricing and maintenance of assets. This risk assessment matrix helps a business in constantly monitoring factors that might cause potential problems to the smooth running of business. Finally, they also help in identifying problems early and solving them before the risks can lead to potential loss.

Identifying the risks in your business

Your risk management framework should be able to properly identify the potential threat of various risks to your type of business. For example, if you are a restaurant, then the biggest risk that you face is from the quality of your raw ingredients. Your operation risk will include your servicing and culinary skills and in the same vein your human risks will include the management of your staff and their behavior. Although the broad aspects of business risk management remain the same for most businesses, their characteristics change with the type of business that they are applied to. You need to be able to identify project risks in order to ensure the smooth functioning of your organization.

Eliminating risks from the business

Timely business risk analysis will mean your business will remain safeguarded against possible problems. In case, there is a problem, ensure that the risk management methods that you employ are based on sound prioritization of the level of the risk. You of course need to take care of the bigger risks before delving into the problems created by smaller risks. Insurance plays a key role in averting risks. Make sure that business is insured in such a way that valid compensation is available to you in case of any eventuality.

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