Recent events in the Ukraine and its far-reaching political impacts remind us once again that global volatility and uncertainty are the new norm. And as businesses cast their net wider to tap scarce pockets of growth they take on new levels of risk, especially in emerging economies. But how do companies account for risk? Were they taken completely by surprise or did their business assumptions take heightened risk into account? Even companies not directly affected by events in the Ukraine could see spiraling energy prices.
For many organizations the management of risk is a haphazard affair and as a result their earnings are a ‘hostage to fortune’. On the other hand businesses that try to identify risk and quantify the probability and impact of different scenarios are in a better position to respond to risk, limit its impact and even turn it to competitive advantage.
But it all starts with a risk aware culture, i.e. one in which management is encouraged to talk about risks, plan for risk and monitor key risk factors – and all of this needs to be supported by enabling organization, technology and processes. For those that have invested in risk management, recent events will be unwelcome but manageable. On the other hand businesses which failed to recognize and record risks, may have a difficult times ahead.
Go to Trintech Resources to learn more about Financial Governance, Risk and Compliance, and Record To Report Best Practices.