Today, every business model is imbibing a structured Risk Management into their business model as a key set of ongoing activities which necessarily comprise of is the identification, evaluation, and prioritization of risks and then execution of well-coordinated and optimized plans to minimize, monitor, and control the probability or impact of unfortunate scenarios/events or to maximize the realization of opportunities.

Nobody had thought of a Pandemic scenario that we are experiencing; it was almost a “Shut-down” for more than a year across the globe which actually crushed out small-medium businesses and even to large business houses to a great extent. On these grounds, effective Risk Management is the key action for all business leaders.

What is Risk Management?

Risk management encompasses a set of structured activities starting from the identification, analysis, followed by the proposed action with proper monitoring and controls to measure the overall effectiveness.

Risk Management is a proactive approach rather than a reactive which outlines the probable risks and also suggests means and ways to address/nullify the same. Therefore, effective risk management offers the potential to reduce both the possibility of a risk occurring and its potential impact. Risk Management is an ongoing activity applicable to all businesses irrespective of their size, geographies, offerings, and technology. It is a tool that empowers business leaders to mitigate the known/unknown disruptions to the business in a structured and optimized manner. A good risk management structure should also calculate the uncertainties and predict their influence on a business. Accordingly based on the impact of the risk, acceptance or rejection can be defined.

Risk Management Process

• Identify – Proactively anticipating possible pitfalls of a business model/process/project is the start. Based on experience, market feedback, peer review and contribution from all stakeholders shall narrate the identification of risks. As and when every factor matures, the anticipation ratio increases. This is a key factor in forecasting the business process with corresponding impacts so that the same can be absorbed or anticipated.
• Analyze – Analysis of risk is like a microscopic interrogation. Once the risk is identified, professional tools or experts can analyze its impact and estimate the probability and fallout of each risk to decide where to focus first based on business/project priorities. The analysis not only addresses current risk challenges but also uncovers common issues to be avoided in the future.
• Action – The Analysis triggers the actions. The prioritization of the risk based on its likelihood and potential impact and then executing a sequence of actions. This set of actions will mentor future initiatives/projects and the team also matures on dealing with risk based on priority and its impact.
• Monitor – Ongoing monitoring ensures and refines the actions. Here as the communication enhances across all the stakeholders. Effective monitoring has an equal impact on existing risk management as well as the future posture of the risk.
• Control – Effective Control has dual benefits. While it minimizes the impact on current risks, it also triggers new control points for future processes/projects/business models.  Controlling overall activities

Risk Management benefits the business

The world around us is very dynamic today. Apart from cut-throat competitions, businesses/projects also have to consider and action all the aspects that may affect or disrupt business continuity. Especially, after the pandemic, the importance of Risk Management is highlighted. Organizations are practicing this to optimize the operations, maximize profits, and various other benefits such as

• No Surprises – CXOs are insisting on various initiatives for risk management so that there is no surprise during the business cycle. Early awareness of potential problems means that the right people can intervene to mitigate a problem before it becomes too severe to do anything about.

• Identify Gaps – Risk Management algorithms will also surface some of the gaps in the internal processes which need to be refined. Right from Manufacturing to Sales, the gaps that can impact technically, financially, or operationally can be addressed and removed forever.

• Effective Decision Making – Management needs inputs for better quality standards. Adoption of certain Risk Management frameworks can suffice this. Data received from various touchpoints and processes can create the required Dashboards for the management to act upon.

• Ownership & Escalations – Defined process owners and the action plans in case of escalations nullify the resultant delays and ambiguities. Many times, due to lack of this the project cost increases or the business process becomes ineffective.

• Crisis Management – A proactive approach to expected Crisis and the action plan is a must.  In case of such incidence, the action sequence, responsibility matrix and periodic drills of the same to check the sanctity of the plan gives comfort to the business leaders and ensure that in case of such scenario, the operations can be back on track without much havoc and in a systematic manner.

As mentioned earlier, Risk Management is a proactive approach that can address and eliminate unwanted disruptions and help organizations to focus on their business with higher productivity. Every phase of the business cycle is turning dynamic due to internal as well as external parameters. To cope up with this the Risk Management framework implementation is needed of the hour.

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Global iTS is mainly into the specialized requirements in Financial Services and Insurance sectors focusing on Digital Transformation journey in Retail Banking, Commercial Banking, Insurance Providers, Private Equity, and Investment Banking by bringing Artificial Intelligence, Machine Learning, Blockchain, and Robotic Process Automation technologies and enhanced their productivity and profitability. We bring in over 15 years of international expertise to digitally transform any aspect of a client’s business.