1. Risk and return
<>Before getting into the topic risk management, it must be remembered that any and all business activities necessarily involve risks. The magnitude between gains and risks are directly proportional. Therefore, the greater the expected gains, the greater the risks involved. Entrepreneurship is the search for balance between return and risk, avoiding risks that are too high to seek continuous and sustainable returns.
<>The term risk is normally linked to events that may occur and that have a negative impact on the activity carried out. In the business world, the concept has been modified to identify and measure that event that may occur.
<>2. Risk categorization
<>In the process of risk management, two main criteria must be adopted in its categorization: People, as agents of potential risks and image, as a consequence of the acts committed by the agents. The lack of documentation of the processes can cause a lack of synergy between employees, generating various types of risks:
<>· Reputational, where the company's image may be jeopardized by misuse of resources or poorly designed marketing attitudes.
<>· Market risk, where the company's market position may be hampered by the poor execution of operational and administrative tasks, spending more resources than necessary
<>· Financial risk: risks related to poor financial planning, which can put the company into financial insolvency.
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<>3. Risk assessment
<>To assess risks, it is necessary to define the level of exposure that the company is exposed to risk. No risk management, this level of exposure takes into account the probability of the risk occurring, combined with the amount of probable economic and financial loss that the company will suffer as a result of the risk.
<>4. Risk measurement
<>The measurement of risks is fundamental for the assessment in a process of risk management. The measurement process involves projecting the business budget by area, paying attention to market projections and trends. The areas mapped with potential risks are projected by category, using criteria for potential operational, reputational, and financial risks.
<>5. Risk treatment
<>By adopting the risk management, the company must pay attention to two main measures: avoid it, or accept it. Avoiding risk, the company does not participate in possible gains combined with risk, which may be beneficial or harmful, depending on the amount of return and associated risk. Accepting the risk, the company recognizes that the risk exists, maps, measures and categorizes, seeking a sustainable return combined with that risk. This can be done in the following ways: hold, reduce, or share.
<>· Retaining risk means keeping the level of risk and return proportional, at acceptable levels, through standardization of actions and analyses of the area or type of business.
<>· Reducing means making the risk lower, taking into account that the expected return is lower than the risk taken.
<>· Sharing means spraying the risk, diluting the risk with other companies and also sharing the expected results.
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<>6. Benefits of implementing a risk management method
<>The adoption of the method of risk management it can bring numerous benefits to the company that adopts it, of which we can highlight:
<>· It promotes greater company transparency, bringing more credibility to the market, adding market value.
<>· Improvement of the company's organizational standards and culture.
<>· Prevention of systemic risks and identification of faulty processes in operational and administrative activities.
<>· Improvement of financial ratios, through the maximum use of resources, increasing the company's efficiency and effectiveness.
Contact TATICCA — ALLINIAL GLOBAL, which operates throughout Brazil and globally, with integrated auditing services, accounting, taxes, corporate finance, technology, risk advisory, business consulting, and training. For more information, visit www.taticca.com.br or email taticca@taticca.com.br and learn more. Our company has professionals with extensive experience in the market and has certified methodologies for carrying out activities.
