O Risk management in organizations aims to reduce the impacts of risks, should they materialize.
This management goes beyond the assessment of their probabilities of loss, also addressing the establishment of measures aimed at mitigating risks over time.
The current environment of organizations is demanding, more and more, the adoption of measures and techniques of monitoring and control that aim to reduce the occurrence of failures, avoiding problems that jeopardize the image of the entity, before shareholders, customers and the market. generally. We are aware of the difficulty found in organizations to implement risk management, which can either be outsourced or owned by the company. After all, modifying procedures requires persuasion and skill, so convincing investors about the importance of internal auditing in the final result of financial statements will, in most cases, encounter resistance from clients.
The aspects considered by risk management
In summary, corporate risk management supports the company to achieve its goals and uncertainties that it may encounter along the way, always considering the following aspects:
- Events – Risks and opportunities;
- Definition of risk management;
- Realization of objectives;
- Risk Management Components - COSO;
- Relationship between objectives and components of the COSO – ERM methodology.
The objective of this work is to establish conditions for the risk management professionals of companies and consultancies to be aligned with the organization's strategy, in order to identify the main inherent risks of each business process and evaluate the effectiveness of internal controls.
How does risk management work?
For the elaboration of the Risk management, the following risk components are observed, namely: strategic, financial, risk monitoring and reporting; prevention considering risk appetite, impact and probability of its occurrence.
Strategic risks are associated with senior management's decision-making and can generate a substantial loss in the organization's economic value. The risks arising from corporate mismanagement often result in material fraud in financial statements. Examples: failure to anticipate or react to competitors' moves caused by mergers and acquisitions; decrease in market demand for the company's products and services caused by obsolescence due to the development of new technologies/products by competitors.
Financial risks are those associated with the exposure of the organization's financial operations. It is the risk that cash flows are not managed effectively to maximize operating cash generation, manage the specific risks and returns of financial transactions, and raise and apply financial resources in accordance with established policies. These are occurrences such as inadequate financial management.
Operational risks are associated with the possibility of losses (of production, assets, customers, revenues) resulting from failures, deficiencies or inadequacy of internal processes, people and systems, as well as external events such as natural disasters, fraud, strikes and acts terrorists.
Compliance risks are related to the organization's lack of ability or discipline to comply with legislation and/or external regulations applicable to the business and internal rules and procedures. As it includes internal rules and procedures, it presents a broader context than the most commonly cited type of risk, the legal/regulatory risk, arising from the application of labor, tax, fiscal legislation, referring to contractual relationships, market regulation and services provision.
Benefits of risk management
A Taticca Consultants can help your company to achieve better indicators, practices and risk culture with the following benefits:
- Continuous improvement of processes
- reduce risks
- increase efficiency
- Raise the level of governance
- Optimize human and technical resources in management
- Standardization of processes, easier knowledge transfer
- Greater agility in identifying problems and in the decision-making process through key performance indicators
- Minimize the likelihood that undesirable risks will manifest
- Increase the likelihood that the significant risks to which the company and its processes are subject are known and adequately addressed
Conclusion
This article aims to provide a contribution to the application of risk management with a focus on risks in organizations, based mainly on the union of the culture of good governance and risk management as important figures in contributing to the improvement of business processes.
How Taticca can add value
Taticca Consultores, through its advice, can help your company in risk assessment and business diagnosis, mapping and redesign of business processes, structuring departments and implementing an action plan, aiming to ensure that your company's project is in accordance with legislation and the best current practices, reducing operating costs, adding value, and increasing the company's efficiency and effectiveness.
Does your company need risk management? Taticca has the ideal solution for the strategic protection of your company. Get in touch through the available channels and learn more.