Effective risk assessment and management, implemented across the complete risk spectrum, needs to be a more integral component of all businesses.
The previous focus on insurable-type risk exposures by most companies has given way to a more integrated approach to company risk management with a move towards business-wide risk assessment forming its basis. Companies are now considering all risks in their business, not just asset-based ones, when formulating their risk management strategies.
"The enterprise-wide risk management approach holds that a risk is a risk, no matter what the type. All risks need to be understood and effectively managed in a consistent manner," says Paul Skivington, Alexander Forbes Risk Services.
This approach requires the assistance of multidisciplinary teams of specialists to ensure complete and accurate risk assessment. Although risk management may be centrally monitored, all aspects of the business should be involved in the risk assessment and management process (eg, information technology, treasury and banking, internal audit, etc). As risks are often not confined to only one business area, a collective awareness and sound approach to possible problem situations is essential.
The Turnbull Report (UK) promoted this business-wide approach to corporate risk management and South Africa is now following suit. "The King II Report stipulates that publicly listed companies report on enterprise-wide risk exposures in their annual reports. Enterprise-wide risk management is, therefore, becoming increasingly essential to the achievement of business objectives.
"Enterprise-wide risk management assistance is available to companies needing advice and guidance on this issue. Inputs available include business risk surveys, cost of risk surveys, financial security surveys and business continuity management, to name but a few.
"Ensuring that the risks associated with your existing and envisioned business are properly assessed could go a long way to ensuring both sound business decisions and stakeholder confidence. It is essential that risk management professionals collaborate in order to provide the most appropriate solutions to an organisation's enterprise-wide risks and ensure King II risk reporting/corporate governance adherence," concludes Skivington.
For more information contact Alexander Forbes Risk Services, 011 378 3869.
© Technews Publishing (Pty) Ltd | All Rights Reserved