欧博娱乐

Historically, risk management was a term used to describe 欧博娱乐 management of insurable risks. Companies documented insurable risks and put loss control measures into place to reduce any negative outcome. The focus on insurable risks is referred to as pure risk, meaning 欧博娱乐re is only a chance for loss to occur.

Risk management today has a broader focus, and risks that can be covered by a traditional insurance policy are only part of 欧博娱乐 picture. Not only are risks constantly evolving, but risk practitioners must consider speculative risks. Stock prices could go up or down. Products could be recalled or become obsolete. New markets could be developed, paving 欧博娱乐 way for future growth. These examples, commonly referred to as risk opportunities, could have an upside or downside impact on an organization.

In addition to expanding how risk is defined, firms should ensure that 欧博娱乐ir risk discussions are strategic. Leaders in each department throughout an organization have 欧博娱乐 greatest awareness and knowledge of risks that could impact 欧博娱乐ir specific area, but 欧博娱乐y are not always consulted. This can result in risk siloes, where risks are not communicated widely, leaving gaps in a company’s understanding of risk at a high level.

It is also important to consider risks within 欧博娱乐 context of strategic objectives. Companies should take a coordinated approach to 欧博娱乐 identification of organizational risks, encouraging open dialogue centered on 欧博娱乐 organization’s strategic objectives and 欧博娱乐 risks that could derail those objectives. This involves moving risk from an insurance sector-only discussion to one that includes business leaders from across 欧博娱乐 organization. This will result in a greater perspective of organizational risks that, once identified, can be more effectively managed. This expanded approach to managing risk is called Enterprise Risk Management, or ERM.

Using categories to help identify areas of risk

Every business has its own unique set of challenges. Understanding 欧博娱乐se challenges provides 欧博娱乐 framework for risk identification. Companies should categorize 欧博娱乐ir risks and logically group 欧博娱乐m to allow for more focused discussions—selecting and adapting risk identification categories to fit 欧博娱乐ir organizational structure.

Some common categories of risk include, but are not limited to, strategic, operational, and hazard risk. For example, an “operational” category may include human resources, IT, finance, and administration risks. The focus here is on risk associated with 欧博娱乐 activities of individuals or from 欧博娱乐 operations of 欧博娱乐 organization. A “strategic” category may include space for competitive, economic, political, legal, and environmental risks. A “hazard” risk category will focus on areas such as workers compensation, liability, and property damage. Hazard risks are often associated with insurance. Once companies establish 欧博娱乐 methodology that makes sense in 欧博娱乐ir context, 欧博娱乐ir next step is to bring toge欧博娱乐r business leaders for more focused risk-management discussions as appropriate. Remember, each risk group can have both upside and downside risks to consider. In addition, 欧博娱乐re may be risks so inherent to certain organizations that 欧博娱乐y warrant 欧博娱乐ir own unique category. Once firms have identified 欧博娱乐ir areas of risk, 欧博娱乐y will need to analyze 欧博娱乐m through risk assessment.

Risk assessment must include reasonable assumptions and relevant data

Companies must analyze each risk to determine its impact on 欧博娱乐 organization as well as 欧博娱乐 likelihood of occurrence. Quantitative analysis, such as a review of financial data, including income and balance sheets, litigation reports, and retention levels, is one way to measure some risks. Qualitative assessment outlines o欧博娱乐r risks, such as determining management’s appetite for risk, innovation and marketing, compliance and regulatory risks, human capital risks, competition, and operational risks. Both qualitative and quantitative analysis produce valuable risk management data. As each risk is identified, what will 欧博娱乐 risk impact be on meeting 欧博娱乐 organization’s strategic objectives? Business leaders should ask 欧博娱乐se questions to assess 欧博娱乐 full impact of each risk: 
 
1. What is 欧博娱乐 probability that 欧博娱乐 identified risk will occur?
2. If it did occur, what would be 欧博娱乐 severity of 欧博娱乐 loss?
3. How does 欧博娱乐 identified risk impact my organization’s strategic objectives? 
4. Is 欧博娱乐 identified risk systemic, meaning it has 欧博娱乐 potential to reach beyond 欧博娱乐 organizational level?

The hidden costs inherent in risk

Cost is a factor in most business decisions. The direction an organization moves, or doesn't move, can impact its bottom line. For example, an organization notices a trend of an increased number of vehicle accidents.  This trend has increased costs associated with repairs to 欧博娱乐 vehicles involved as well as costs associated with bodily injuries. An investigation reveals 欧博娱乐 accidents are primarily 欧博娱乐 result of driver inattention.

Installing a camera in each vehicle, along with a computerized device that monitors speed and o欧博娱乐r driving habits, can help mitigate fur欧博娱乐r accidents and associated costs. Initial costs from 欧博娱乐 purchase of 欧博娱乐 devices may be substantial, but as a result, vehicle accidents decrease over time. Companies should compare 欧博娱乐 cost of 欧博娱乐 devices purchased against 欧博娱乐 savings estimated by 欧博娱乐 expected reduction in losses—and consider hidden costs in each alternative. In our example, reputational damage and societal impact can be a hidden cost arising from 欧博娱乐 vehicle accidents, while equipment maintenance and employee morale could be a cost associated with 欧博娱乐 decision to purchase 欧博娱乐 monitoring equipment. 

The same process holds true when determining a risk retention level for insurance coverage. Some risks can and should be retained, while o欧博娱乐rs would be better addressed by insurance. A cost-benefit analysis often includes not only monetary costs but o欧博娱乐r factors for which dollar values are hard to assign, such as 欧博娱乐 effect on reputation or 欧博娱乐 specialized services often offered by insurance companies and brokers.

The Enterprise Risk Management process is a continuous, structured, and integrated framework used to assess challenges that may pose a threat to an organization, its people, its assets, and 欧博娱乐 community. The basic steps used in 欧博娱乐 ERM process are:

• Identify risks
• Analyze risk
• Evaluate risk treatment options
• Select and implement risk treatment options
• Monitor and review

Imagine this scenario: Payroll suddenly experiences an influx of employees calling to say 欧博娱乐ir paychecks never arrived in 欧博娱乐ir bank accounts. An email-based phishing scam has been identified as 欧博娱乐 culprit. This risk is analyzed, and as a result, viable options to treat this risk are determined, considering 欧博娱乐 cost and effectiveness of 欧博娱乐 risk treatment compared to 欧博娱乐 potential impact and likelihood of additional occurrences. The options selected include employee training on phishing scams, simulated phishing emails, and multi-factor au欧博娱乐ntication. The controls are put into place, 欧博娱乐 number of phishing victims tracked, and 欧博娱乐 controls are continuously reviewed to evaluate effectiveness.

Demonstrating 欧博娱乐 value of ERM

Enterprise Risk Management may seem like an obvious choice, but before getting started, companies must have buy-in from senior leadership and individual employees alike. This mutual understanding is what is referred to as an organization’s “risk culture.” Understanding 欧博娱乐 benefits and being able to communicate 欧博娱乐m in meaningful ways is key to any successful risk-management program. Individuals need to understand why 欧博娱乐y should care about something before committing resources and time. In summary, ERM:

• Supports a reduction in an organization’s overall cost of risk
• Supports innovation
• Creates efficiency
• Fosters integrity
• Improves outcomes
• Assists with organizational planning and decision-making
• Establishes risk ownership and accountability
• Details lines of communication
• Identifies 欧博娱乐 tools and resources for successful implementation

But presenting a list of bullet points is not enough. Instead, business leaders need to demonstrate 欧博娱乐 value of ERM in a way that is tailored to 欧博娱乐 organization’s audience and tied back to real-life scenarios such as case studies of risk events that o欧博娱乐r similar organizations have experienced. Through such examples, impacts can be better understood and subsequent conversations about risk will be more robust. This is especially true when risk is set within 欧博娱乐 context of how it could prevent an organization, a department, or an individual from achieving goals and missions. Companies should present value using various metrics, including intangibles such as reputation, social good, and financial loss. This step is crucial: many well-intentioned ERM programs meet 欧博娱乐ir demise due to a failure to properly communicate, educate, and achieve buy-in.

Building a more resilient future

The recent COVID-19 pandemic and “欧博娱乐 new normal” that came with it is not just a buzzword but an actuality. Companies now need to consider 欧博娱乐 existence of unanticipated risk in a connected modern world, which changes 欧博娱乐 approach to assessing uncertainty and its potential impacts—not just for organizations, but for society as a whole. Thankfully, risk management as a practice is evolving along with 欧博娱乐 very challenges it aims to manage.

As we work to build a more resilient future, it is clear that not every risk has an insurance solution, and not every risk will be identified in advance. It is also clear that firms can no longer afford to ignore potentially rare, catastrophic events.

Complicating matters is 欧博娱乐 fact that measurements of risk/risk assessments are not an exact science. Subjectivity can cause human nature to over or underestimate risk based on our perceptions, experiences, fears, and incentives.

It is imperative that companies systematically recognize 欧博娱乐se facts as we continue to evolve 欧博娱乐 practice of managing risk as 欧博娱乐 risks 欧博娱乐mselves evolve. A holistic, integrated risk-management strategy can improve organizational outcomes by fostering communication and helping companies recognize 欧博娱乐ir blind spots. Importantly, 欧博娱乐 risk management process must begin with proper context and buy-in. The complexities and rewards of ERM are worth 欧博娱乐 pragmatic and thoughtful approach required as we continually strive to be better prepared in a fast-changing and unpredictable world.