What exactly is Risk Management, and why is it so critical?

FinTech, also known as Financial Technology, is a rapidly growing industry that aims to improve financial activities, particularly for businesses, by automating and streamlining processes such as the delivery and automation of financial services.

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What exactly is Risk Management, and why is it so critical?

Everything, from getting out of bed to undertaking a large-scale construction project, involves some level of risk. Putting steps in place to lower the possibility of a bad event occurring and, if it does occur, limiting the negative impact to the absolute bare minimum is the goal of any risk management system in operation. Although this appears to be a straightforward procedure in theory, it can be a complex and time-consuming operation in practise.

The risks that businesses face are numerous and varied: from failing to work in a manner that is compliant with relevant health and safety legislation to inadequate data protection systems, failing to comply with relevant environmental requirements, or leaving an excessive carbon footprint – it is all too easy for a business to inadvertently place itself in a high-risk position. Robust risk management not only assists in ensuring that an organisation complies with the law, but it also frequently results in improved outcomes for clients, employees, and profitability for the organisation.
What exactly does risk management entail?

Risk management is a multi-stage approach that may be applied to any type of organisation. First and foremost, it is vital to identify the most significant risks that the organisation may face. Once these have been established, it is necessary to conduct an audit of the systems that are currently in place in order to identify any potential oversights or weaknesses that may exist. The development of a competent risk management system will be required if there is no such system in place. Once a system has been developed, it must be put into operation, monitored, and assessed in order to determine its effectiveness. Monitoring and assessment are ongoing processes — as businesses expand and grow, it is necessary for risk management systems to evolve and grow in tandem with them. The mechanisms must be reviewed on a regular basis to ensure that they remain relevant and effective.

What is the significance of risk management for businesses?

A lot of advantages can be gained by proactive risk management. The following are the primary advantages:

The chance of unintentionally breaching the law has been reduced!
Businesses are expected to comply with several pieces of legislation in a variety of sectors, such as health and safety and data protection, for example. Risk management in these sectors is concerned with guaranteeing compliance and assisting a company in conducting its business in a lawful manner. This not only helps to decrease the possibility of a criminal prosecution in the case of an unfortunate incident, but it also helps to reduce the likelihood of expensive litigation in the future.

It is possible that a high-quality risk management system will have a positive impact on your insurance premiums! Because risk management lowers the possibility of undesirable occurrences occurring, it is appreciated by insurance companies.

Increased corporate resilience is desirable.
Part of risk management entails evaluating not just how to lower the likelihood of a bad event occurring, but also how to plan for and mitigate the negative repercussions of such an occurrence if it does occur. Having a plan in place allows a corporation to
“bounce back” quickly after experiencing a setback, thus lowering the likelihood of catastrophic effects.
Employee and customer service has been improved. It is critical to safeguard your customers, employees, and members of the general public while they are on your premises and/or participating in activities for which you are responsible. Risk management increases worker safety, which ultimately leads to more productive ways of working.

Increased long-term viability as well as the possibility for increased profit
An organisation that is proactive in risk management is a forward-thinking firm that is concerned with protecting its assets, whether they are physical or human. As a result, the likelihood of critical risks materialising is reduced, as is the likelihood of the firm being protected in the event of the worst case scenario.

If you don’t have a risk management system in place, what are the ramifications that could occur?

The following are some of the possible ramifications of this:

  • The absence of a risk management system makes determining whether or not what you are now doing is sufficient to ensure compliance with applicable legislation extremely difficult to ascertain. In other situations, you may be operating illegally and be completely unaware of it until an unpleasant incident and subsequent investigation bring the issue to your attention.
  • An organization’s vulnerability to bad occurrences is increased when there is a lack of risk management. The risk of being caught without the necessary resources or planning when a disaster strikes is high if your organisation does not have a plan in place for how it will respond.
    You could lose customers as a result of this. Customers are extremely likely to abandon a company if an undesirable incident becomes public knowledge, which is especially true when it comes to topics such as data protection.

What kind of risk management assistance can JVR provide to your company?

In order to fulfil your specific needs, JVR offers a cost-effective, comprehensive risk management service that may be tailored to your specific needs. We provide a FREE GAP analysis, which allows you to identify the most significant areas of weakness in your present risk management systems and make informed decisions. We may use this knowledge as a starting point to develop low-resource solutions that have a demonstrable and positive impact.

Why take a chance on the problems that can arise as a result of poor risk management? For further information, please contact us.

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