Reality: Risk management can make or break a company's success!
In Florida, we're not strangers to the need for Insurance...or the consequences of a cataclysmic event. From home insurance to business policies, we understand Risk Management. You may cut some premium by sharing risks with the insurance company, but most of us would not skip the insurance completely.
But that's exactly what some companies are doing without sound risk management activities.
Strategies for Risk include transferring risk to another party, avoiding it, reducing the negative effects, and accepting some or all of the consequences of a particular risk. Traditional risk management focuses on risks stemming from physical or legal causes (e.g. natural disasters or fires, accidents, death, and lawsuits). Technology Risk Management focuses on risks that can be managed using technology solutions.
In ideal risk management, a prioritization process means that risks with the greatest loss and the greatest probability of occurring are handled first. Risks with lower probability of occurrence and lower loss are handled later. In practice, this demands experience, collaboration, and solid processes, since balancing high probability/ lower loss vs. lower probability/high loss risk is often be mishandled.
Intangible risk management identifies a new type of risk - one with 100% probability of occurring, but which is ignored by the organization due to a lack of identification ability. For example, knowledge risk occurs when deficient knowledge is applied. Relationship risk occurs when collaboration ineffectiveness occurs. Process-engagement risk occurs when operational ineffectiveness occurs. These risks directly reduce the productivity of knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation, brand value, and earnings quality. Intangible risk management allows risk management to create immediate value from the identification and reduction of risks that reduce productivity.
Due to pressure for short term results, Risk management activities sometimes face difficulties attracting resources. Here, opportunity cost should be considered; resources spent on risk management could have been spent on more immediately profitable activities. Here is where experience pays off because proper risk management minimizes spending while maximizing the reduction of the negative effects of risks.
When Risk Management became part of the requirements for compliance with GLB, SOX, HIPAA, and other regulations, formalized and standardized Risk Management processes became the norm. Discover for yourself how Norris Long can make your due diligence activities yield tangible improvements in existing operations while working with you to identify and defuse major risk categories.
Call Bill Long for more information.