MANAGING AND MITIGATING RISK
Risk is often viewed as a compliance matter that will be addressed and managed by an organisation’s compliance department through policies, procedures and processes that employees follow. Establishing risk-mitigation activities like these does indeed address risk to a certain extent; however, it does not eliminate risk nor the impact a significant and sudden risk-related event could have on an organisation’s business operations.
There are a multitude of risks that can impact a company, and it must be agile enough to identify the type of risk and respond appropriately and effectively. Additionally, companies must be open to discussing risk – both the positive and negative sides of it. Acknowledging that risk will always exist helps to mitigate manageable risks, identify where smart risk-taking can propel commercial strategy and respond to those risks that are unexpected.
Elements of an effective risk management framework
Mismanagement of risk can negatively affect an organisation’s culture and commercial and operational successes. Utilising a risk management framework enables an organisation to effectively manage risk. This framework is anchored on risk identification, impact, mitigation, reporting and monitoring, and governance, as outlined below.
Risk identification. Risk identification helps define the risk universe and all possible threats to the company, which can include cyber risk, operational risk, geopolitical risk, and compliance and regulatory risk, as just a few examples. Assessing the risk universe helps an organisation establish its risk appetite and identify which risks it needs to tackle first.
Apr-Jun 2024 Issue
Patterson Companies, Inc.