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Operational Risk Management

What is it?

Any kind of business exists to create added value for interested parties. All enterprises are facing to uncertainty while making business and management task is to decide the level of this uncertainty as well as to define wich level will be appropriate creating added value. From one hand uncertainity brings risk and from theother hand it opens new opportunities. So it may lead either to losses or to value increase. Risk management allows to act effectively in uncertain conditions and use opportunities for potential growth of company value.

Risk management

Why do you need this?

Operational risks management process will allow managers to reach desired indicators of profitability and return on capital and to prevent irrational resource utilization. Risk management helps to provide effective financial reporting, compliance to local or international legislation and avoid reputational losses. Thus, risk management gives an instrument to reach business goals and evade errors and surprises.

How does operational risk management work?

Operational risk management includes:

  • Definition of risk appetite in line with the business strategy. Enterprise management evaluate risk appetite (risk you are ready to accept) when choosing strategic alternatives and mechanisms to manage risks.
  • Improvement of decision making process as reaction on exposed risks. Risk management process defines the preferrable method or approach of risk mitigation – risk avoidance, risk reduction, risk transfer or risk acceptance.
  • Cutting of unexpectable events and losses amount. The enterprises enlarge theirs opportunities to detect potentially unwanted events and implement appropriate controls to cut off those events and connected expences and losses.
  • Definition and management of all business risks. Any business sooner or later meets the risks which influence on its organizational structure. Risk management process gives the ability to react more effectifely on different impacts and to have integrated approach to manage variaty of risks.
  • Using favorable opportunities. Taking into account all potential events and not only possible risks, management is able to use those of them wich give potential opportunities.
  • Rationale on capital use.More information about risks allows management to evaluate common capital expences better and more effectively and optimize capital distribution and use among business units.

 

As a result you will get:

  • Implemented risk management process;
  • Working controls for risk management;
  • Defined level of risk appetite;
  • Implemented decision making prosess on exposed risks;
  • Recommendations for risk management.

Risk management system implementation will allow you to improve financial posture of your company, increase effectiveness of its operations, cut off amount of unexpectable events and losses, recieve higher investment rating and invest capital with better profit.