The velocity at which today’s global marketplace is changing requires organisations to continuously re-assess risks or events that may affect the achievement of their strategic business objectives.
The changes we have noted in technology are currently significant drivers. The pace at which innovation in the field of technology is evolving has a broader impact on organisations’ systems, operations, processes and people.
Management must evaluate the extent of the effects of the change on the organisations' activities. Effective
Risk Management processes and tools are crucial for ensuring that organisations continuously manage their risk environments.
The impact of change is not only associated with adverse outcomes, such as loss of income, loss of market share, inefficient or redundant systems and operations or the inability to access capable and skilled resources. The impact can potentially also create new opportunities for organisations to pursue and enhance their existing service offerings.
Defining the risk appetite of the organisation will allow it to determine the types and amount of risk is it willing to take to achieve its objectives. An effective risk management process provides for ongoing assessment of the changing risk environment and to determine if there is a need to adjust internal resources to mitigate the identified risks.
Embarking on such a process may be perceived as overwhelming at first. Reasons for this may include:
- Changes in the risk environment that stem from areas that were once not considered core to the operations of an organisation.
- The level of change did not have any significant prior impact relating to how the organisation deployed its resources in the past.
Managing risk exposure through developing and maintaining an adequate and effective internal control environment is not a foreign concept to management teams, process owners and employees of an organisation. Facing new challenges due to a changing risk environment does not require you to re-create an approach when determining how to address these challenges.
Organisations and Professional Institutions and Associations have come a long way in establishing and implementing fundamental concepts, models and frameworks to address challenges faced by organisations. Although the application of these models and frameworks are adjusted and enhanced over time to include changes in the business environment, the key fundamental principles and the use thereof remain mostly unaltered.
Acknowledging and adjusting to change (especially in today’s business environment) may seem an over-complex and daunting exercise for organisations. The application of the critical fundamentals in approaching risk management remains as relevant in today's business environment as ever before. As risk management is a continuous process, it requires management to proactively re-evaluate the effectiveness of its implemented system and processes.
The following are some of the elements that are essential for your risk management process:
- Implementing an enterprise-wide risk management policy and framework. A well-defined structure sets out the process for identification of risks through to evaluating root causes and developing action plans.
- Consistency in executing risk management is vital. Implementing a structured framework has the benefit that the approach to risk management is consistent throughout the organisation. The process of risk management can be enhanced by utilising a risk management tool or by capturing the risk register in excel (in the early stages of rolling out a formal risk management plan).
- All business processes must contribute to the risk management process. Risk resides in all areas of the organisation. Through including all business operations within the organisation, potential risks and their impact can be better understood and approached.
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risk management for your business.