Big or small; risk management is considered to be a crucial part of strategic 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.
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.
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 overall costs and increase efficiency are important additions to business processes.
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 efficient, robust internal audit and risk advisory services to our clients that assist them in successfully mitigating the challenges posed by the ever-changing needs of today’s businesses and their environment and also help them in the identification of value creation opportunities.
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