Risk management has slowly crept into every part of the business turning into an inevitable part of the process of manage threats. Traditionally it was thought to avoid the financial crises related to any business. However there was insurance to recover all the losses incurred in a business before people realized the potential of enterprise risk management.
Risk Management programs of the new age is not just meant to mitigate losses related to business, but offers a complete solution to all those unleashed critical crises as well as anticipated ones. Organizations must commit to undertake comprehensive and focused assessment of those risks and key vulnerable areas of business.
A Good Management Team is essential to maintaining a sound risk management program. The board of management's role is not just limited to their views on what could have been done to better understand and proactively address exposures. The board management committee must evaluate the material risks and help the board to consider that how the risks are interrelated to each other.
The most important thing is to manage and balance your risks by identifying and minimizing the negative consequences of the same.
Over the years, enterprises have realized the importance of integrating effective risk management programs to their business. Various global risk management surveys have revealed the escalation of the use of Enterprise Risk Management (ERM) software by organizations up from 52% in 2010 to 62% in 2012.
The boards must participate in leadership and strategic areas of the business. A robust risk management system must aim towards a practical approach to risk oversight designed specifically for boards of directors, including a framework, methodology and toolsets.
The board must assess through focusing in these areas:
How well does the board understand its oversight mandate and role?
Does the Board understand its responsibilities for Risk Management?
Are the Board members visionary of the types and sources of risks faced by the organization?
Developing a strategic risk management program can offer a strong solution types and sources of risks faced by the organization for improving risk management and governance. It is observed that the risk management framework has a maximum impact if it is owned and supported as an integral part of the business processes. A dynamic corporate culture supports a well developed strategic risk management program by turning the risks into opportunity.
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