What measures of financial risk management do you employ in your company? If you haven't implemented one yet, you are exposed to significant risks: an unexpected event could jeopardize the viability of your project. Maybe, after this start, you are wondering what is risk management. It consists of identifying, analyzing and quantifying the probability of incurring secondary losses and negative effects caused by disasters.
Furthermore, it supposes define and establish preventive, corrective and reductive actions about. That is, it aims to provide the means to prevent them from happening and, where appropriate, know how to react to compensate and minimize their effects. Have a control plan and an effective program in this field is increasingly important, since its existence can prevent serious financial disruption in the event of an incident.
1. Who needs to have an effective program to manage their risks?
What would happen if one of your investors or lenders stops providing you with the agreed periodic money? What if one of your factories or warehouses catches fire? Imagine that your innovative star project, recently launched, fails: would you be prepared to face it?
Know what is Risk management It is the first step to become aware of this type of unforeseen events. As Jean Jacques Rousseau anticipated: "A very necessary foresight is to know that not everything can be foreseen." Therefore, having a control plan and action to manage risks is essential.
In reality, all companies need to invest time and resources in financial risk management, including yours. When an unexpected problem appears, having invested in financial risk management makes all the difference. This is, between survival and closure.
Most especially, banking companies and insurance companies must have excellent insurance policies. financial risk management. Also, it is convenient for those companies that provide long-term financing to their clients.
Don't hesitate: invest in a program and a control plan of risks to strengthen the strength of your project. Listen to Rousseau: he foresees that not everything can be foreseen.
2. What steps allow you to implement an effective financial risk management program?
After understanding what is risk management, it is time to take action. Thus, the best decision is to implement a specific personalized program.
A great help are the capable of recording, analyzing and monitoring the financial situation, both corporate and of each specific project. Among other features, they carry out monitoring reports illustrated with indicators, tables and graphs that facilitate understanding. Likewise, they establish segmented analyzes of the profitability that is being obtained or could be obtained.
1. How to implement a financial risk management program?
Remember: when you manage to identify any threat to your company's resources in time, you are avoiding the possibility of incurring million-dollar losses.
Have a good control plan and managing this aspect correctly benefits you in four aspects:
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Good reputation.
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Greater credibility in the markets.
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Increased stability Company.
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Minimization of the catastrophic consequences.
These are the steps you should take in your organization to apply what is risk management with a good program:
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Create the personalized framework based on your activity: products, employees, marketing, security, clients, regulations…
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Review and monitor the required information.
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Identify all risks: contracting, performance, continuity, acceptance, services provided...
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Contextualize the situation with respect to your specific circumstances.
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Communicate, involve and consult permanently. The agents involved are multiple and heterogeneous: workers, clients, suppliers, partners, auditors, consultants…
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Define expiration dates for your program.
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Consider the risks and opt for training. These can often be reduced or avoided with good decisions. Training is as important as prevention; It is one more factor of it.
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Establish periodic evaluations of the situation and how it evolves. Analyze the past and present, regularly, to anticipate future situations.
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Keep track of your policies, procedures, processes and evaluations. This information is invaluable in guiding your subsequent actions.
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Delegate and distribute responsibilities. At least one person must be specifically responsible for supervising this information and potential risks.
Apply these guidelines and don't hesitate: bet on financial risk management to avoid surprises.
