O risk management in organizations, it aims to reduce the impacts of risks, if they materialize.
This management goes beyond the assessment of your chances of loss, also addressing the establishment of measures aimed at mitigating risks over time.
The current scenario of the organizational environment has increasingly required the adoption of monitoring and control measures and techniques aimed at reducing the occurrence of failures, avoiding problems that jeopardize the entity's image, before shareholders, customers and the market in general. We know how difficult it is for 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 be resisted by clients.
The aspects considered by risk management
In summary, corporate risk management supports the company to achieve its objectives and uncertainties that it may encounter in its journey, always considering the following aspects:
- Events — Risks and opportunities;
- Definition of risk management;
- Achievement of objectives;
- Components of risk management - COSO;
- Relationship between objectives and the components of the COSO — ERM methodology.
The objective of this work is to establish conditions for risk management professionals in companies and consultancies to be aligned with the organization's strategy, in order to identify the main risks inherent to each business process and evaluate the effectiveness of internal controls.
How risk management works
For the preparation of 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 decision-making by senior management and can generate a substantial loss in the organization's economic value. The risks resulting from business mismanagement often result in material fraud in the financial statements. Examples: failures to anticipate or react to the movement of competitors caused by mergers and acquisitions; decreased market demand for company 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 effectively managed to maximize operating cash generation, manage the specific risks and returns of financial transactions, and capture and invest financial resources in accordance with established policies. These are occurrences such as inadequate financial management.
Operational risks are associated with the possibility of losses (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 terrorist acts.
Compliance risks relate to the organization's lack of ability or discipline to comply with external laws and/or regulations applicable to the business and internal rules and procedures. Because it includes internal rules and procedures, it presents a broader context than the most commonly cited type of risk, the legal/regulatory risk, resulting from the application of labor, tax and tax laws, relating to contractual relations, market regulation and the provision of services.
Benefits of risk management
A Taticca Consultants can help your company 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 that the company and its processes are subject to are known and adequately addressed
Conclusion
This article aims to provide a contribution to the application of risk-focused risk management 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 consultancy, can help your company assess business risks and diagnose, map and redesign business processes, structure departments, and implement action plans, to ensure that your company's project complies with current legislation and best 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. Contact us through the available channels and find out more.
