The continuous growth of globalisation and technology has brought in rapid change. This has led to new products and technologies, shorter product life cycles, more competition and less time for businesses to react to threats and challenges. In turn this means that business risk is continuing to rise.
How to respond
Best practice businesses have responded to the conundrum of increased risk by putting it at the forefront of their strategy. When planning their response to, say, a new investment, risk is incorporated into the project plan and mitigating strategies are developed to reduce each risk identified to manageable levels. Thus, instead of the risk committee considering risk in the business, it has been brought to the coal face of business operations.
Risk has also increased with new regulatory demands being placed on organisations, for example the Consumer Protection Act and the Protection of Personal Information Act. Regulatory compliance risk is now being assessed as part of a business’ ongoing strategy.
Where to start?
Some of you may not have consciously considered risk but it will have been at the back of your mind. Taking into account the above, it is well worth deciding the risk profile you want your business to adopt and then document the risks facing your business and strategies to reduce the risk. This can become an ongoing working document and every time you face an important decision, this document can be used to help in making the decision. In time you will have a valuable risk assessment of your business.
Everything is speeding up which adds to the risk in business – if you don’t already formally consider risk, now is a good time to start.