The success of a venture largely depends on the company’s ability to recognize and manage risks. With the fast-growing digital and interconnected global environment, business risks are occurring with even higher frequency.
In this article at Infiniti Research, Anirban Choudhury explains that constant innovations and operational changes have increased the chances of risk in organizations. Therefore, conventional measures are not enough to beat the risks.
Risk management has become a vital element of successful project delivery. Even the value that enterprise risk management can provide to big and small organizations should overlook. Therefore, if the organizations want to create and maximize value for their shareholders and stakeholders, here are a few approaches they must follow:
- Risk-Aware Culture: Educate the workforce in the practical aspects of risk management. Not only the regular staff but most senior business executives and the corporate board of directors should be aware of the same. Risk management responsibilities should be clear. Training and awareness can help in establishing a risk management culture that will drive a successful business.
- Resource Allocation: Risk management needs considerable expertise and resources to invest into activities ranging from basic risk control to advanced quantitative risk analysis. The cost of these resources might be quite high but the cost of losses due to lapses in risk management will be equally higher.
- Re-assess Risk Constantly: Factors like market conditions, volatility levels, the financial strength of counterparties, physical environments, and geopolitical situations keep changing. To ensure effective risk management, companies must reevaluate risks on an ongoing basis. Also, forecasting future exposures is necessary since hedge decisions project risk levels.
- Risk Mitigation: Transferring risks through windbreak transactions or other activities is often regarded as an effective and advisable risk management technique. Moreover, risk mitigation strategies also depend on the capacity of the firm to sustain risks and possible losses.
Click on the following link to read the original article: http://www.kxxv.com/story/38447051/top-four-risk-management-tips-for-effective-risk-management-infiniti-research