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Here Why Risk Management is an Opportunity for Growth

Here’s why Risk Management is an opportunity for growth

An essential exercise for every business – big or small; risk management is considered to be a crucial part of strategy planning. Spanning operational, financial, human resource and compliance verticals of a business, periodic audits keep one ahead of potential risks. According to established research papers and investigations, it has been observed that the biggest failures and frauds in organizations could have been prevented if they were spotted on time. Timely checks, periodic investigations and preparation of potential risks form the foundation of any organization. In the workings of an organization, where processes can lack clarity and weak structures can add delay growth, it’s important to take an objective stand. Internal risks vs external risks There are two kinds of risks – external and internal. The former is not dependent on the workings of the organization and thus can’t be controlled by them. Whereas the latter is dependent on the management, operations and workings of the organization. An example of the former is economic situations, market rates, exchange rates, political situations and an example of internal risks include non-compliance, operation inefficiency, and redundant processes. Earlier, it was comparatively simpler for organizations to evaluate external factors and project business judgments. Today, external factors are unpredictable and not reliable enough for experts to predict. As for internal factors, it’s important to evaluate operations in order to determine if they are complying with statutory directives. It is also important to evaluate best business practices tailor made for your business. Eliminate redundancy Assume that you hired five vendors during an urgent project. The vendors were hired to expedite the process and lessen the burden on existing vendors. After the completion of the project, it is imperative to conduct checks on the entire vendor base to ensure that all their services are being fully optimized. If five vendors can easily take the burden of ten projects, it would be a waste of money as well as time to hire additional vendors. In the case of financial structures, it is important to reduce paperwork as well as integrate time consuming processes dependent on human interference with technological advancement. Integrations that can drastically bring down over-all costs and increase efficiency are important additions to business processes. Financial audit Internal audits and controls to ensure optimal use of finances is another pillar of risk management. From eliminating possibility of internal frauds, securing financial processes to analyzing leakages – a financial audit brings transparency and accountability. An intelligent strategy with an action driven approach reduces the chances of frauds, internal risks and assures an organization that it is working towards its maximum potential. SOP or standard operating procedure is another important component where regular audits can make a big difference. A well-drafted and planned SOP can help an organization control its business operations, analyse revenue leakages and also ensure that one can tackle these gaps through effective strategy. A risk management audit across the organization gives the management an opportunity to revive flagging initiatives, improve processes and introduce new ideas and strategic improvements. If you’d like to understand how risk management will help your organization. We at ASC believe in providing an efficient, robust internal audit and risk advisory services to our clients that assist them to successfully mitigate the challenges posed by the ever-changing needs of today’s businesses and its environment and also help them in the identification of value creation opportunities. You can get in touch with us at info@ascgroup.in

 

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