Here's how you can spot and evaluate potential risks in your business.
Identifying business risks is essential for maintaining the health and sustainability of your venture. In the realm of practice management, being proactive about risk evaluation is not just a safety net—it's a strategy for continued success. As you navigate the landscape of entrepreneurship, consider the following guidelines to help you spot and evaluate potential risks in your business. By understanding the potential pitfalls and actively working to mitigate them, you'll be better equipped to steer your business towards a secure and prosperous future.
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Sunil RajaManaging Director, Head of Financial Institutions Credit Risk at Lloyds Banking Group
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Elizabeth Hinden D'EliaExecutive Group Head of Risk Management - LATAM Cluster Head | MBA
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Chipo Evelyn GuraAssociate Director | Customer Due Diligence Expert | Correspondent Banking Specialist | MBA, BBA…
The first step in managing risks is to become aware of what they are. Think about both internal and external factors that could negatively impact your business. Internally, this could mean employee turnover, financial mismanagement, or inadequate policies and procedures. Externally, you might face risks like market fluctuations, regulatory changes, or technological advancements that render your product or service obsolete. By maintaining a keen awareness of these potential issues, you can begin to address them before they become problematic.
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Elizabeth Hinden D'Elia
Executive Group Head of Risk Management - LATAM Cluster Head | MBA
The hardest part is to want to see the risks. Once managers are aware they need to make a decision on either mitigate or accept the risk. Most of time people are blindsided by processes and do not see beyond the powerpoint or the excel file. If one want to be risk aware, need to look at the environment and understand that PPTs and XLS are just tools. Ask the right questions and be ready to listen the answers. Above all, be ready to invest on mitigants or accept the risk.
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Chipo Evelyn Gura
Associate Director | Customer Due Diligence Expert | Correspondent Banking Specialist | MBA, BBA Marketing, BA English, Insitute of Marketing Management (IMM)
I agree , organizations need to create an awareness that all staff are responsible for risk identification within their sphere of influence. Once the culture of identification and escalation is inculcated, risk management process becomes ingrained in BAU it’s no longer treated or handled in isolation.
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Deborah Shalangwa, CRM, ACIB.
Enterprise Risk Management
Risk awareness is crucial in risk management. Risk awareness can be enhanced within the organisation by training the employees and providing them with adequate knowledge to identify potential risk in their daily processes and activities. Enlighten the employees to understand risk management is everyone's business and they are all gate keepers. This is important because the risk that is yet to be identified cannot be treated.
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Breno Fernandes, CFP®
Multi Family Office | Planejamento Patrimonial | Estruturação Financeira | Captação de Recursos | Valuation | M&A
Em um mundo empresarial cada vez mais complexo e dinâmico, a conscientização sobre os riscos que uma empresa enfrenta é fundamental para a sua sustentabilidade e crescimento. No coração desta conscientização está a minha metodologia de avaliação de riscos chamada SINAF, que avalia cinco grandes categorias de riscos que toda empresa deve gerenciar: Soberano, Indústria, Negócio, Administração e Financeiro. Quer saber mais, confirma o artigo no meu perfil.
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Mary Egu
Operational Risk Manager
Absolutely! Acknowledging the existence of potential risk may initially be a scary thought, however, the awareness of its existence will help to put things into perspective in how to approach such and what next steps to take. Risk awareness cautions us and so smarter approach is the way to go. Not only are you dealing with situations but also dealing with people and so emotional intelligence comes into play too.
Once you've identified potential risks, it's time to assess their impact and likelihood. Consider creating a risk matrix where you can categorize each risk by its severity and the probability of it occurring. This visual tool can help you prioritize which risks need immediate attention and which ones can be monitored over time. Remember, assessing risk is not a one-time task but an ongoing process that requires regular review as your business and the external environment evolve.
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Aashay Apte
Linkedin's Top Practice Management Voice | Regional/Area Credit Manager @ Deals of Loan | Credit | Fraud | Risk | Ex-Zestmoney | Ex- Axis Bank
Identifying the risk itself is one of the task. Most of the times it is not even identified. There are various tools available in the market based on manual intervention or even based on AI. One of the best way to assess the risk is by implementing stress testing. Stress testing comprises of scenario analysis , historical data , hypothetical, event driven scenarios and portfolio driven. Stress testing needs to be done on regular basis as it is an ongoing process where data changes on real-time basis, hence changing the outcome.
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Yasser Saud Dahlawi
Founder & CEO - Shariyah Review Bureau | Leadership Coach | Board Member | Audit Committee Member | EO Member | Member of GCC Board Directors Institute
For example, we have developed a feedback mechanism for legal risks related to our service agreements, where any arising issues are promptly addressed and incorporated into our standard agreements.
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Lauren Crawley, MSc
Risk 'Pracademic' - always seeking to understand current research and improve business risk (and health, safety and biosafety) management
Much has been written about the limitations of risk matrices so make sure that you are aware of these and take them into account in your prioritisation and risk mitigation strategy. Here are some references 1. Cox, L. A. (2008). What's Wrong with Risk Matrices? 2. Thomas, P., Bratvold, R. B., & Bickel, J. E. (2014). The Risk of Using Risk Matrices 3. Ball, D. J., & Watt, J. (2013). Further thoughts on the utility of risk matrices 4. Duijm, N. J. (2015). Recommendations on the use and design of risk matrices. 5. Hubbard, D. W., & Evans, D. M. (2010). Problems with scoring methods and ordinal scales in risk assessment.
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Ponimin H.
Strongly agree with the matrix, but the key of risk identification should be the people not the matrix. We should add expertise judgmental and behavioral for any decision making.
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Osman Karim
Energy Expert | Hydropower Expert | Senior Technical Consultant | Head of MEP & Energy Unit | Project Management | Strategic Planning
example of one of the potential risks is the loss of trained staff. We must work to preserve them, and this requires creating a system that limits the matter. The other example is the risk of recurring technical malfunctions as a result of lack of quality maintenance, for example, and this requires analysis and follow-up to improve maintenance to avoid the resulting dangers. From reputational and material loss to the organization, it is time to evaluate its impact and probability of occurrence. Consider creating a risk matrix where you can classify each risk according to its severity and likelihood of occurring
After assessing the risks, develop strategies to mitigate them. This could involve diversifying your product line, investing in staff training, updating technology, or enhancing your cybersecurity measures. Each risk may require a different approach, but the goal is to minimize the potential impact on your business. Effective risk mitigation often involves a combination of preventative measures and contingency planning for how to respond if a risk materializes.
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Ejaz Ahmed
xDeloitte. Professional Accounting Affiliate ICAP.
Risk mitigation strategies are plans or actions taken to reduce the likelihood or impact of a potential risk. Here are some common risk mitigation strategies: 1. Avoidance. 2.Transfer 3. Mitigation 4.Acceptance 5.Diversification 6. Hedging 7.Risk sharing 8. Contingency planning 9.Insurance 10.Asset allocation 11.Liability management 12.Business continuity planning These strategies can be applied to various types of risks, such as financial, operational, strategic, compliance, and reputational risks.
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CA Anas Kamal
DAMAC| Ex GT | Data Analytics | Process | Controls | Re- engineering and improvements | Cost Optimisation | Regulatory Compliances | IFC | ICFR | Internal Audits | Fixed Asset Management | ERM | Python | Power BI
Strategies to mitigate risk include diversification of investments, obtaining insurance coverage, contingency planning, avoiding high-risk activities, implementing risk-reduction measures like improved safety protocols, transferring risk through contracts, monitoring for early detection, training stakeholders, ensuring legal compliance, and preparing emergency response plans. These approaches collectively aim to minimize the impact of potential risks on operations and enhance organizational resilience.
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Soji Onile Bsc, MBA, ACA
Resident Control Officer at First Bank of Nigeria Ltd
Mechanism should also be put in place by the organisation to receive feedback from customers on the performance of products. This is to ensure that the product is meeting the expectations of the consumers. The risk here is that where product fails to meet consumer expectations, the demand drops and sales is affected. Adequate feedback from consumers on the product is necessary to mitigate product risk.
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Syed Muhammad Aahab
Assurance and Finance Professional | Audit Specialist
Moving ahead with the ALARP system. We wind up with a heatmap that has least risky areas (these should be ignored), the most risky areas (these should be dealt forthwith via hedging or other strstegic decision) and the ALARP (as low as reasonably possible) region, for this region the organization must formulate risk mitigation plans as and when able.
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Nasser Dreige
Coordenador de Auditoria e Controles Internos na Abbott | Certificado Green Belt
Muitas vezes o combinado não é testado nem constantemente monitorado, por isso a mitigação de riscos deve ser sempre colocada à prova de falhas para que o risco não seja desconhecido novamente.
Communicating risks effectively within your organization is crucial. Everyone from the leadership team to the frontline staff should understand what the risks are and what their role is in mitigating them. Clear communication ensures that all team members are vigilant and can take quick action when necessary. It also fosters a culture of transparency and accountability, which is vital for effective risk management.
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Melvin Pang MBCI
Operational Risk Manager at Measat Satellite Systems Sdn Bhd
Risk mitigation presents an opportunity to strengthen our business against potential disruptions. Craft tailored strategies, such as diversifying product lines, staff training, updating technology, and fortifying cybersecurity, to proactively address identified risks. Remember, each risk requires a unique approach; analyze its specific nature to tailor the mitigation strategy effectively while considering cost-effectiveness. The overarching aim remains consistent: minimizing potential impacts on your business. Blend preventive measures with contingency plans to ensure readiness to respond should a risk materialize. Guide your organization in navigating uncertainties with resilience and agility, empowering teams to thrive amidst challenges.
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Gustavo Balmaceda
Jefe de Riesgo Tecnológico en Banpro Grupo Promerica
Comunicar el riesgo permite la toma de decisiones por stakeholder, desde los diferentes niveles de la estructura organizativa. Esto incluye la información de los escenarios identificados, medición de los escenarios y planes de tratamiento.
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Simone Luzzi
Auditor | Finance Professional
Effective risk communication transcends mere transmission of information—it transforms the organizational culture. The leadership's role is not only related to identify and evaluate risks but to set the tone for the entire organization, communicating with clarity. For frontline staff, the message must be accessible and actionable. It’s not enough to know that risks exist; they must understand how their daily actions contribute to a larger strategy of risk mitigation. When they see themselves as integral parts of the whole mechanism, their vigilance and responsiveness are naturally enhanced.
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Balaji Prasad
Company Secretary || MBA || B.Com || Pursuing LLB
Enhance your business's resilience with effective risk communication: 1. Identify Risks: Clearly define potential threats. 2. Inform Stakeholders: Keep everyone informed about risks and mitigation plans . 3. Develop a Plan: Create a clear communication strategy. 4. Regular Updates: Provide consistent updates on risk status. 5. Encourage Feedback: Foster an open dialogue for continuous improvement.
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Awais lughmani, ACCA UAECA
Senior Internal Auditor at Government of Dubai
Everyone, from top to bottom, should participate in risk management. Every adverse event must be reported promptly, and timely communication is crucial.
Continuous monitoring of risks is an integral part of practice management. This means not only keeping an eye on the risks you've already identified but also staying alert to new risks that may arise. Implementing a system for regular check-ins on risk metrics can help you catch issues early and adjust your strategies as needed. The business environment is dynamic, so your approach to risk management should be as well.
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Sherif Afifi
Group Chief Compliance Officer| FinTech | RegTech | Digital Transformation | FinCrime | AML | KYC| Governance| Retail Banking expert
Utilize Risk Assessment Tools: 1- SWOT Analysis: Identify strengths, weaknesses, opportunities, and threats related to the business. 2- PEST Analysis: Examine external factors (Political, Economic, Social, Technological) that could affect your business.
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alexandre silvano
Gerente de Auditoria na ArcelorMittal Brasil
Particularmente gosto de um processo de gestão de riscos com periodicidades definidas para a revisão das matrizes. Uma boa época seria a revisão próxima dos comitês de riscos, para que os membros trabalhem e decidam com informações o mais atuais possíveis. É importante que um mecanismos de monitoramento de ameaças externas também esteja funcionando. Parceiros externos podem ajudar muito.
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Balaji Prasad
Company Secretary || MBA || B.Com || Pursuing LLB
Enhance your business resilience with effective risk monitoring: 1.Establish Metrics: Define key indicators to track risks. 2.Use Technology: Implement tools for real-time monitoring. 3.Regular Reviews: Conduct frequent assessments of risk status. 4.Adjust Strategies: Update mitigation plans based on new data. 5.Report Findings: Communicate insights to stakeholders promptly.
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Shawn R. Lock
Field Claims Manager at Conifer Holdings, Inc.
Once the Risk "red flags" are identified, a system can be put in place to monitor, track and then strengthen your existing preventative system by also identifying weak spots within your own organization. Be knowledgeable, reach out into the industry your organization is a part of in order to see what others are doing, including any other forms of risk they have encountered, and grow your monitoring and mitigation system. Be proactive and become a leader in your industry!
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Miguel Luna, CAMS
KYC Onboarding Analyst @ Bank OZK | ACAMS Certified | Specialist in KYC, Enhanced Due Diligence, AML/CFT, CIP & Negative Media for New/Existing Clients. 🌎
Continuous monitoring of risks is essential for effective practice management. Here's how to stay ahead: 1. **Regular Risk Checks:** Frequently assess for new risks and review existing ones. 2. **Dynamic Metrics:** Use real-time data to track risks and adjust strategies. 3. **Automated Tools:** Implement tools that provide alerts on risk changes. 4. **Stakeholder Input:** Regularly involve stakeholders for diverse risk insights. 5. **Team Training:** Ensure your team is aware and trained in risk management. 6. **Flexible Strategies:** Be ready to adapt your risk management approach as needed. By following these steps, you can quickly identify and respond to risks, keeping your practice resilient and agile.
Finally, document all your risk management activities. This includes the risks you've identified, assessments, mitigation plans, communication methods, and monitoring processes. Documentation provides a record that can be invaluable for understanding how risks evolve over time and for demonstrating due diligence in your risk management efforts. It also serves as a reference for training new staff and for informing strategic decisions.
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Aashay Apte
Linkedin's Top Practice Management Voice | Regional/Area Credit Manager @ Deals of Loan | Credit | Fraud | Risk | Ex-Zestmoney | Ex- Axis Bank
Effectively maintaing risk documents can comprise of day-to-day reports, risk assessment reports, incident reports, fraud reports etc. These documents are now maintained in the revolutionary era of AI and ML where all the report data can be reviewed, updated on regular intervals to maintain accuracy and evaluate relevance in risk assessment. Still in this revolutionary era, manual intervention is absolutely necessary to review as it gives a personal touch (identifying mindset in risk, fraud).
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Sunil Raja
Managing Director, Head of Financial Institutions Credit Risk at Lloyds Banking Group
Think the unthinkable … don’t debate how possible a scenario is, just run with it and assess the impact. Think beyond your own field of expertise (e.g Credit Risk) and consider what else could go wrong (such as overloading markets infrastructure).
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Luís Marcelo
Supervisor de Segurança Patrimonial | Gestão de Segurança | Segurança Corporativa | Gestão de Riscos | Prevenção de Perdas | CFTV | Coordenação de Segurança | Análise de Riscos | Normas e Procedimentos
Uma coisa que acho útil na avaliação de risco de um negócio é considerar vários fatores cruciais. Primeiro, a identificação de riscos é fundamental para saber quais ameaças podem afetar a empresa. Em seguida, a análise de impacto ajuda a entender como esses riscos podem afetar financeiramente, operacionalmente e em termos de reputação. Avaliar a probabilidade de ocorrência de cada risco é igualmente importante. Além disso, é vital verificar os controles existentes para ver se já há medidas eficazes em vigor. Estabelecer planos de contingência claros garante uma resposta rápida a incidentes. A compliance e regulação também deve ser considerada para garantir conformidade legal.
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Aksel Nangolo, MPhil,CIA,CRMA
Manager Internal Audit at Namibia Power Corporation
The one aspect that is often neglected in the organizations risk management effort is the human element of risk management (behavioral-risk management). The organization can adopt the very best risk management frameworks, methodologies, tools and practices but often the success of risk management is highly dependent on human behavior toward risk management. The issue of organization culture, perception, attitude for example, can build or break risk management efforts. It is therefore important for organizations to focus on both the technical and soft aspects of risk management. Often, it is the soft issues that fails the risk management process.
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