When large companies fail, they can often find themselves at the centre of scrutiny, even criminal prosecution, especially when innocent people are effected negatively. When smaller companies, even those without consumers, fail, they also suffer the effects of scrutiny, served by their creditors or others. Some examples include
Investment Management firms and banks failed epically during the financial crisis of 2008. A large number of people across the world were devastated by the fall out, morality was questioned and it raised a plethora of investigations about the way that investment managers were remunerated, the management of rogue trading, toxic mortgage products ….. I think you may be familiar with the rest.
Social media giants and their mis-treatment of personal data, innocently provided by users of their instruments, led to a review of the Data Protection Act …. now known as GDPR. This revised act aims to prevent companies from mistreating personal information, ensures that consent to retain personal data is not complicit any longer, moreover an expression of intent has to be provided by the data collector and consent has to be sought before anybody’s personal information can be retained.
Fast Food is only fast food if their outlets have a continuous and guaranteed supply of their main food source. I think you will agree that it seems like an irony if an international fried chicken supplier runs out of chicken? You would think that this would be the main priority for such an organisation, but it seems that an oversight in the timing of changing your logistics firm, which delivers the chicken to your outlets can happen if operational risk management is not a part of the everyday activity of your company.
How can good risk management have helped to prevent such failures?
Risk is a term used for managing uncertainty and seizing the maximum opportunity that your business or organisation can handle, whilst minimising any detrimental effects. This is the surest way of achieving your organisations’ goals. It also provides the optimal strategic journey with which to move forward, when business planning.
Increasing uncertainty, fast-moving events and intensifying demands are putting leaders and decision-makers under immense pressure. Organisations now need to anticipate risks early and react promptly to keep safe, operational and resilient. Effective risk management is critical to provide a clear, connected and forward-looking view of the threats and opportunities that your organisation faces. Giving you the confidence that you are doing the right thing, have got the right information to run your business and are making the right decisions.
A Covid-19 disrupted world now demands that your decision-making is agile, accurate and well-informed, more than ever before, because this feeds into the world in which you do business (also known as systemic risk), your strategy and enthusiasm for taking risks and your available resources. All of which may be uncertain at the same time.
Risk management reporting directly supports your decision makers, making sure that they are “well-informed”, creating certainty in an otherwise uncertain world by:
- Reducing the chance of bad things happening to your organisation in the first place and, if they do happen, to reduce their impact / damage
- Increasing the chance of good things happening to your organisation in the first place and, with a greater benefit!
Alternatively, not getting risk “right” can have serious consequences for your organisation, reputation, regulatory and legal relationships, customers, investors, on occasion even you as an individual and the wider communities that you engage with.