https://www.trcconsulting.org/services/governance-risk-complianceRisk is a critical ingredient in the success of any organization. However, risk is also of two kinds: Planned and Unplanned. While planned risk has more chances of taking the company forward if it is dealt with properly, unplanned risk can throw the company off track and cause huge losses. That is why every company needs to have a proper risk management system in place. Such a system should consider all types of possible risks based on industry trends and past records and then help in mitigation.
However, there are also many kinds of myths surrounding risk advisory services and management, which may have an adverse effect on a company’s growth. So, let us discuss a few such myths that every company should stay away from to ensure smooth functioning and growth in the long run.
Myth 1: If an organization is following proper project management, its risk management responsibility is covered.
Reality: An organization has several dimensions to its working. The different projects that may be underway will only be one part of the whole. So, even if there are proper risk advisory services management for different projects, the organization needs to consider risk from a broader perspective.
When you set broader as well as standard contingency measures in financial aspects and other ways, you create room for adjusting risk arising from both separate projects as well from an overall perspective. Further, no matter how good your project managers are, they are still not invincible. Therefore, you cannot completely prevent the occurrence of risk leading to losses and accidents. Therefore, risk advisory services and project management must go hand in hand.
Myth 2: If a company has completed its risk register, then it has covered its risk management responsibilities fully.
Before we discuss this myth, let us tell you what exactly a risk register is?
A risk register refers to a document that is used as a risk management tool by companies and entities while fulfilling their regulatory compliance. The document acts as a repository of all identified risks and includes information about the nature of different types of risk, mitigation measures taken and other such details. The information may be displayed as a table or a scatterplot. Most large companies prepare such a register for auditing and regulatory purposes.
Reality: However, while it is an excellent practice to maintain such a register, it is essential to dispel the myth that merely maintaining this one-dimensional record may not be sufficient. It is because the register does not factor in several corresponding elements, such as the frequency of events and the amount of losses caused.
A risk register should be one of the steps in the process and should be followed up with the following steps:
Identification of Risk Correlations
Defining Cost-Benefit Analysis
Listing Down Various Combinations of Mitigation Actions and Expected Loss Reduction
Quantitative Assessment of various risks
Risk analysis and practicing Monte-Carlo simulations
Simulation of risks following the mitigating actions
All these steps will give you an accurate picture of the risks along with their consequences.
Myth 3: Stronger Control Means Having Better Security and Risk Advisory Services Management
Reality: Many companies often face a conflict between accomplishing business objectives and following security practices. While the company heads may give nearly equal importance to both aspects, motivated or driven employees may give more emphasis on achieving business targets and objectives. That is why, having more robust control in the organization does not stand as a guarantee of better risk management.
A much better way or approach for any organization would be to design its security and risk advisory services control measures conscientiously around business objectives. Such a well-constructed risk model will help address both risk management needs and business goals simultaneously.
Myth 4: A Competent Risk Advisory Services Can Single-Handedly Manage Big and Small Exposures
Reality: Many organizations feel that hiring a competent risk advisory services will practically safeguard the company from all kinds of risk. That is why leaders hire a dedicated or full-time risk advisory services with the thought that it will help them lets others off the hook. However, that isn’t right at all. The risk advisory services, no matter how competent they are, cannot mitigate risk alone. They can only identify risk areas and guide in taking steps in the best direction.
Unless there is support from peers, subordinates and superiors in developing and sustaining a holistic risk management program, a company’s growth is sure to get hampered.
At TRC Corporate Consulting, our dedicated team can help your organization in leveraging possible risks in the right manner to help achieve continued growth and success. We believe in challenging the traditional approach to risk management and suggest taking tailored models for achieving effective mitigation results. Our 70+ years of experience in research and risk advisory services can put your company on the right pedestal and safeguard it from possible risk scenarios. If your team has any queries regarding our services, then contact us for a better understanding, and we will assist you with the same.