A meaningful understanding of risks and an effective risk management strategy are essential to navigating the challenges and surprises of today’s business environment, providing critical intelligence to executive decision makers. Risk management can help solve, reduce or avoid the problems your business faces and will face in the future, by ensuring proper and effective controls and processes are in place.
Risk is the possibility of an event occurring that will have an impact on the achievement of objectives. Risk is measured in terms of impact and likelihood. Business risk arises as much from the likelihood that something good will not happen as it does from the threat that something bad will happen.
Risk management is a discipline for identifying risks, assessing how serious or severe the risks are, and determining ways to address that uncertain future with a goal of avoiding or minimizing harm and financial losses. Risk management focuses on those events or occurrences that may cause injury or harm to an enterprise, its clients, its assets (including employees and volunteers) and its reputation. Essentially, risk management occurs anytime an enterprise analyses and attempts to quantify the potential for losses in an environment or action, and then determines the best way to handle that risk, whether through action or inaction, given the enterprise objectives and willingness to take risks, also known as risk tolerance. Inadequate risk management can result in severe consequences for companies and individuals.
To prioritise your risk management ‘to do’ list, you need to determine which risks are most likely to occur, as well as which risks will result in the most severe harm. This exercise is called a “risk assessment.” For some organisations, losing power or water damage due to severe weather may be a frequent occurrence that has been successfully managed so that if it happens in the future there may be minimal disruption and financial impact; while for others, a serious loss such as a factory fire or accident, may be extremely unlikely given the supervision and safety procedures in place, but, because of the severity of the loss, risk management procedures at the factory are a high priority for that organisation.
It is important to get the right risk management advice, from people who understand your business. ORCA is committed to making and taking the time and effort to understand the risk environment and unique challenges facing each client. We will partner with you to find the best risk management strategy to illuminate the path forward for your business to achieve its objectives, enabling sound controls and processes. Risk management can uncover your key business challenges and equip you with the strategies and tools to overcome those challenges to take your business to new heights.