Optimal Risk Management within an organization involves coordinating all business risks and integrating them into on-going business processes and incorporating risk adjusted analysis into decisions to undertake new business processes.
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Regulatory and Compliance Risk: In one way or another every business has to follow externally dictated and enforced rules while conducting business operations. In every jurisdiction every business must be tax compliant, usually have some form of business registration, license or permit to conduct its activities, and frequently may have to submit to some periodic government required audit, exam, or reporting requirement.
There are some industries, such as financial services, health care, energy, and transportation, that not only have to operate within complex regulatory systems but face severe sanctions for non-compliance. The risk here lies in both the actual occurrence of operating in a non-compliant way, but also the potential of regulator imposed business interruption, and loss to business reputation and subsequently the loss of customers as a result.
Information Security Risk: The potential impact of a company losing control of its information either from externally sourced intrusion and data extraction or by loose or ill-defined internal information security policies can be quite severe and lead to significant financial losses to an organization.
The portability of information which can be a boon to business operations also presents a significant security threat to the organization that must be addressed with an internal control and monitoring system that both mitigates the threat and allows for the fluidity of business to continue uninterrupted. In addition, it is not only what technology that is deployed within an organization, but how people are using it.
Fraud/Misappropriation & Theft Risk:Every organization is susceptible to fraud, misappropriation and theft, whether perpetrated by an insider, or by an external party that finds an opportunity to exploit. The risk here lies in the way that the risk scenario typically unfolds where the activity is conducted either over a very long period of time, or is a single event, in either case they both can go undetected for some time. The potential loss to the organization can become significant financially but also from a brand standpoint as the news of the event reaches customers and potential customers.
Financial Risk:How a company manages its finances is critical and the process and procedures that are in place for managing accounts receivable, accounts payable, the extension of credit, financing, disbursements, and accounting practices is critical in mitigating and avoiding financial risks to an organization.
Competition Risk:Business by nature is competitive and companies are always under the threat of industry innovation, product maturity and stagnation, new entrants, and variable market forces. Business operations, management, and sales activities need to be understood in concert with each other and coupled with business intelligence and competitive analysis to understand the competitive forces that the organization faces.
Disaster and Business Continuity Risk: It is one of the unfortunate consequences of nature and man-made threats that businesses must plan for the possibility that its activities will be interrupted by some outside, uncontrollable force.