Effective risk management can help private companies grow on solid
TORONTO, June 11 /CNW/ - In the current economic environment, sound risk
management has become a key focus and necessity for private companies. Indeed,
according to a new article from PricewaterhouseCoopers (PwC), having a risk
management system is vital to ensuring that all stakeholders in the
organization are on the same page and in helping to take advantage of new
opportunities, such as expanding the business overseas to addressing climate
- Risk management provides in-depth awareness and analysis to help
private companies achieve their business goals
- In the post-recession landscape, risk management will likely play a
much bigger role in business success
- Without a sound risk management process in place private companies
could be at a competitive disadvantage
"A risk management system gives companies contingency plans to deal with
sudden risks such as a market downturn or the loss of a major client," says
Mike Harris, leader of PwC's Canadian Corporate Governance practice. "But it
also provides them with the strategy and methods to carefully assess the risks
involved in taking new opportunities and plotting their course with the
confidence of knowing they are prepared to deal with these risks."
According to Harris, risk management is not just about avoiding or
mitigating risk, but also managing it. To help private companies implement an
effective risk management system, Harris offers the following tips:
- Take a very honest and thorough look at your company. Decide on your
risk appetite and know the key risks you should be looking at.
Ensure that your plans for dealing with risks - from major issues to
new sales or growth opportunities - are aligned with your strategic
plan or objectives as a company.
- Identify your true unique risks - don't rely on standard formulas.
Every industry has its specific top risks, and every company within
those industries also has its own unique risks based on its culture,
maturity, place in the market, etc. Find your concealed risks, such
as compensation based strictly on gain without factoring in loss.
Expand your outlook and data to be more forward-looking.
- Weave your risk management process throughout your company. Risk
management starts at the top of the company, but, overall, it is a
team effort. Your risk management strategy should be integrated
throughout the company with clear communication. Make sure you have
the right people, mechanisms, culture and technology in place.
- Don't leave for tomorrow what can save you today. Many companies are
in survival mode to manage through the current environment and are
not thinking ahead. Harris suggests, "If cash flow is paramount
right now, that is probably your greatest risk and you should be
focused on it. However, develop a plan for when you get through the
credit crunch - don't be caught one step behind your competitors."
The full article can be found in the "Let's Talk About" section at
http://www.pwc.com/ca/pcs. This series of articles from PwC's Private Company
Services group helps business owners think about topical issues and
opportunities that can affect the performance of their business.
For more information on managing in a downturn, visit
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