Risk Management: How Risky is Your Business?

As differences in each departmental division of a company become more distinct due to the various processes they carry out, it has become increasingly important to manage these all potential and existing risks in the company. Today we will be identifying potential risks, their impact on an organization, frequency of occurrence and we will also suggest some mitigation strategies.

Reputation Risk
Reputation and brand names take a long time to build and it very difficult to regain if it is lost. Anything can affect a company and its reputation whether it is positive or negative. Law suits in the corporate world are of high frequency and have a high impact on the company and its reputation. An example of this could be Hyundai being sued for its insufficient fuel efficiency. This highly impacted Hyundai's reputation as now the name is known to be unreliable as it had a product recall in the past for some of its cars. People would not look at the company like they used to since it has been sued for a fault in their product and competitors would also not miss a chance of degrading the company to increase their own company.

Operational Risk
Operational risk involves risks that arise from within the internal processes of a company, this can include the people, systems and the way things are generally done inside a company or sometimes from external events. One example of an operational risk that can take place in a company is minor accounting errors made by the employees. Such type of risk is usually of high frequency and low impact. Since operational risks are generally not directly linked to the profits of a company the tolerate strategy can be used to mitigate the risk. Since the impacts are so low the company will in most cases bear the loss that will occur from it.
Human Resource Risk
HR risks are very important to manage as the company relies most on its people and the information they possess. Firing, hiring, health, safety and employee supervision are some areas that are highly prone to HR risks. Firing is one of the areas that has a high impact on the company. It is important to ensure that the fired employee does not have access to any of the company files or assets. Therefore, all passwords and access codes should be de-activated to secure the firms private information. This HR risk could expose all the private information of a company to its competitor, leading to its downfall. Sharing of confidential information does not highly occur in the business world but, if it does this would have a very high impact on the company and could lead to no business at all.

This risk can be treated by enhancing of technology so when an employee is terminated the system would automatically block the worker from accessing the system. It is important to always check and change passwords and access codes to prevent this risk. HR risks can be disastrous for the workplace however, it is possible to prevent these risks from taking place.

By: Shizra Saqib

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