Identifying and Managing Business Risks
There are many types of business risks such as physical risk to buildings, stock and employees, market risk, technology risk, fraud risk and risk that a profitable opportunity is not identified and acted upon. Some can destroy a business, while others can cause serious damage that can be costly and time consuming to repair. Despite the risks implicit in doing business, CEOs and/or risk management officers – no matter what the size of business, from small to corporate giant - can prepare for them if they know what they are. If and when risk becomes reality, a well-prepared business can moderate the risk's impact. Dollar losses, lost time and productivity and the negative impact on customers can all be minimized.
Once risks have been identified, they must be prioritized in accordance with your assessment of their likelihood and impact. Some risks are inarguably high priority, such as the risk of fraud or embezzlement if employees handle money or perform accounting duties in accounts payable and receivable. If a business relies heavily on computerized data – customer lists and accounting data, for example – exterior back up will be necessary. Insurance is a principle safeguard in managing risk, and many risks are insurable. Hiring a risk management consultant may be a prudent step in the prevention and management of risks.
Prevention is better than cure
The best risk mitigation is prevention. Preventing the many risks from occurring in your business is best achieved through employee training, background checks, safety checks, equipment maintenance, and maintenance of the physical premises. A single, accountable staff member with managerial authority should be appointed to handle risk management responsibilities. A risk management committee may also be formed with members assigned specific tasks.
How can we help ?
Hiring a risk management consultant may be a prudent and cost effective step in the prevention and management of risks.
At Fraudintegrity Simon Padgett has over 20 years of experience in Risk Management. He has been the Head of Risk for two publicly quoted companies as well as Head of Risk and Internal Audit for the largest family owned conglomerate in The United Arab Emirates. Simon ensures that the Risk function adds value to the organization by ensuring that it is ‘enterprise –wide” and includes a corporate governance compliance function and full fraud risk management.