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In corporate risk management, the first step is to identify and outline the risks your business faces.
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Corporate Risk Management:Your Options
Every business faces risks – both internal and external – but there are a number of options you can explore when it comes to deciding how to deal with them.
In corporate risk management, the first step is to identify and outline the risks your business faces.
Here are some common categories of risk to consider:• Hazard risks such as natural catastrophes, property damage and lawsuits.• Financial risks such as cash flow issues, commercial viability, debtor management etc.• Operational risks such as reputational damage, customer satisfaction and product or service quality.• Strategic risks such as social trends or new competitors starting up.
Once you’ve identified the risks you face, the next step is to think about the likelihood of each risk eventuating and the consequences if it does – these help you decide which risks should be a priority.
When you’ve identified your priority risks, its time to work out what you’re going to do about them.
Sometimes you can get rid of a risk entirely – for example by doing something differently, renegotiating a contract, replacing equipment or ceasing an activity.
In other circumstances, you can plan to reduce the likelihood of the risk – for example through training – then implement a plan to mitigate the effects if it does happen.
Some risks which can’t be avoided, and which are substantial, can be “transferred” to insurers.
1300 INSURE (1300 467 873) | F: 1300 365 822 | [email protected] | www.ebm.com.auNew South Wales | Victoria | Queensland | Western Australia | South AustraliaCoverholder at Lloyd’s | Global Broker Network | Asia Australasia Alliance | National Insurance Brokers AssociationElkington Bishop Molineaux Insurance Brokers Pty Ltd | AFSLN 246986 | ABN 31 009 179 640 | Est 1975
Corporate Risk Management:Your Options
Many types of insurance are available guarding against everything from catastrophes and management liability to cyber exposures such as computer hacking.
Insurance can be purchased direct from a single insurer or through an independent broker who investigates the market to find the most appropriate cover at a reasonable price – and who will then go in to bat for you in the event of a claim.
By clarifying the level of risk that is acceptable to you, and by fostering a culture of responsibility and integrity in staff, management can help keep risks from becoming a drag on the business.
Some risk can give rise to opportunity, such as a bank’s credit risk when lending money or a miner’s when sinking a new shaft. Risks associated with research and development activities can also be worth taking if all goes well.
Risk management is an ongoing situation which should be regularly reviewed, with processes updated, taking into account changing customer tastes, the financial environment, legal changes, competitors’ initiatives etc.
In larger organisations, internal auditors contribute to the review and assessment processes and ultimate responsibility rests with the C suite (the top senior executives) and, in turn, the board. In smaller businesses risk management updates may be a less formal process conducted by the owner or a senior manager.
Strong corporate risk management and appropriate insurance are complemented by business continuity planning and crisis management planning – as accidents can and do occur in even the most risk aware businesses and natural catastrophes are always a possibility.
If you have any query about our services, visit our website http://www.ebm.com.au or feel free to call us on 1300 467 873.
1300 INSURE (1300 467 873) | F: 1300 365 822 | [email protected] | www.ebm.com.auNew South Wales | Victoria | Queensland | Western Australia | South AustraliaCoverholder at Lloyd’s | Global Broker Network | Asia Australasia Alliance | National Insurance Brokers AssociationElkington Bishop Molineaux Insurance Brokers Pty Ltd | AFSLN 246986 | ABN 31 009 179 640 | Est 1975
Our advice about insurance is provided for your general information and does not take into account your individual needs. You should read the Product Disclosure Statement and Policy Wording prior to making a decision, these can be obtained directly from EBM.
