How risk assessment protects the bottom line
December 1st 2006

What risk management means to industry and how one international company is providing the right software package to solve problems,make companies more efficient and give management peace of mind

Risk Assessment is largely about evidence. Companies have increasing obligations to prove they manage risks and demonstrate compliance. Laid open for all to view – from the shareholders to the employees – professional risk management will lead to cost reduction and improved performance.

Many things influence the bottom line. There are the obvious and there are the less obvious. There are inquisitive outsiders, good and bad employees and there are reputations; there are also Regulations. Almost monthly,new Regulations emerge covering health and safety, environmental damage, risk management, compliance and reporting obligations. All these are distractions from the core business of running the company and making a profit. Clearly, they are irritants but irritants which to ignore you do so at your peril.

The problem and the burden Management now has a host of matters to deal with which are related to profit and loss because they have greater responsibilities to the company, to their employees, to their customers and, ultimately, to their shareholders. Failures like Enron and Barings may have been exceptional and spectacular but the ramifications of the directors' mismanagement have cascaded down to influence the culture of plc and ltd companies, large and small.

Not so long ago, there was a relative absence of regulations.Compliance has now become a burden. Often companies complain about the additional people needed to implement the Regulations.Cost apart, there is the time-consuming and inconvenient business of implementation. Of course,well thought out Regulations are not designed to inhibit business operation.They should seek a balance between the undesirable aim of absolute safety and the type of poor risk management, which damages lives, the economy and the company.

In practice, it just is not that simple.

Reporting Managing risks is about understanding what can go wrong with both your business model and what will prevent the smooth running of your operations. There are external and internal dimensions to this greater understanding; however, a comprehensive understanding will also identify opportunities.The secret of success is to provide smarter software solutions. These should enable businesses to achieve improved profitability as a result of adopting good governance, enterprise, risk management and compliance coupled with good performance management.

The ideal is to implement the appropriate level of control that brings the company within its risk appetite – this is a key objective of Enterprise Risk Management (ERM). It is one for which dedicated software companies, like Cura, provide professional and cost effective solutions.

What you need The solution lies with a single system, easy to use. To be effective the data needs to be capable of being analysed and reported according to any criteria so that it is turned into knowledge in order to maximise action and be effective. It then becomes a powerful, essential decision-making tool.

Clearly, the challenge is to understand the numerous regulations and concurrently to manage enterprise risks. When a company understands the risks and regulatory obligations, there are cost effective ways to manage the risks and comply. The Cura system, for example, can provide a vital component – documentary evidence of how the company has dealt with its risk management and compliance obligations. When this is done successfully, the end goals of staying in business, improving profitability and the company's market value will be achieved.