Given the global events over recent years and the variable recovery being experienced by different sectors, it is timely to reflect on how these have impacted on the business environment and how businesses must respond to mitigate the subsequent risks. These recent events highlight the increasingly more complex and volatile environment businesses operate within, which has an impact on strategic decisions that influence business viability. It also emphasises the reality that although not all risks can be mitigated individual businesses can implement strategies and systems to protect themselves.

Risk management systems, while ensuring compliance with legislative requirements, have a major influence on the reputation and culture of a business therefore must be comprehensive and wide ranging. Incorporating all critical functions of the business into risk management systems will have a positive impact on the company’s risk profile. These systems can also be leveraged to achieve a competitive advantage resulting in business longevity and sustainability.

Corporate structure is a form of risk management that is clearly the domain of the company’s accounting and legal professionals. However a robust risk management system needs to incorporate other personal and operational facets of the business to mitigate risks that are the responsibility of the Directors and / or business owners. Examples of these include:

Personal and key personal

  • Directors, owners and key employee covers
  • Clear roles, responsibilities and performance measures
  • Succession planning

Finance

  • Finance structures, type of finance and bundling
  • Security and equity / leverage
  • Budgeting and monitoring

Physical assets

  • Insurance
  • Preventative maintenance programs
  • Renewal projections

Labour and workforce

  • People and skills match to business strategy
  • Recruitment and retention processes
  • Operational succession planning

Environmental

  • Pollution probabilities
  • Carbon footprint

Company reputation

  • Ethical performance and culture
  • Corporate social responsibility

Direct and indirect stakeholder management