Managing Risk in all its Glory
July 11, 2018 - Managing risk may be one of the biggest issues facing businesses of all sizes today. What's your process for risk management? The best approach is to develop an integrated program to which all parts of the organization -- not only the risk management committee -- contribute. Perhaps these articles can help you review your process and/or design one that might be more successful.
The impact of an event may be negative, positive or both. Events with a negative impact represent risk, which can prevent value creation or erode existing value. Events with a positive impact may offset negative impacts or represent opportunities. Opportunities are the possibility that an event will occur and positively affect the achievement of objectives, supporting value creation or preservation. Management channels opportunities "back to its strategy or objective-setting processes, formulating plans to seize the opportunities."
Unpredictable environmental or societal happenings in far-flung parts of the world could have negative consequences for businesses around the globe. Threats like these are the reason business continuity (BC) exists---to try to mitigate the risks posed by disruptive incidents like these, plan for them, and prepare to weather any possible storm. But can you really be prepared for the sheer number of business continuity risks that exist in the world?
Business resiliency in the face of disruption starts with good governance practices and business continuity and disaster recovery (BC/DR) planning is an essential element. It's imperative for every enterprise to conscientiously develop business resiliency through integrated risk management, and to ensure that governance, risk management, and compliance activities are valued and prioritized across all enterprise functions.
Risk can span across multiple areas within the business environment, and a single risk factor can have numerous cross-organizational touch points. Vastly different business units such as information security, vendor management, compliance, business continuity, physical security and human resources are all critical aspects within an overall risk and compliance strategy. Yet these separate areas within an organization can traditionally lead to a silo-based and inefficient approach to risk management.
Trends across economics, demographics, and geopolitics, in addition to rapid technological progress, combine to create new challenges for organizations around the world. These challenges present many opportunities. However, these shifts also deliver many new risks, which need to be managed.
The business you are building has been an all-consuming priority, a labor of love. You've devoted time and trouble to get the business up and running. Your creativity keeps it growing. You're a rock of commitment. It's exactly because you're so devoted to the business, though, that you might be overlooking business risk factors that are obvious to others.
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