The Committee of Sponsoring Organizations published an enterprise risk management integrated framework in 2002, which has helped companies that were desperately seeking a good enterprise risk management program. The framework guides companies to customize enterprise risk management. This framework has created an awareness to comprehend the risks their companies face, judge how well equipped they are to meet the risks, what steps needed to be taken to minimize the risks and counter them and to make sure risk analysis is an ongoing process in order to identify new risks. Companies have to coordinate risk management, its internal controls and enterprise performance management, in order to eliminate risks effectively.
How to Customize Enterprise Risk Management: Companies have to customize enterprise risk management by making risk management a part of its strategic plan. Risk management committees can carefully and meticulously analyzing the risk factors that threaten the company, determine the company’s capacity to deal with each risk, work on ways to improve risk management, conducting periodic checks to monitor if each personnel does his share to minimize risks, and steering the company to achieve its target goals despite the risks.
When companies find ways to customize enterprise risk management using the COSO framework as a guide, they will succeed in identifying and facing risks as well as assign personnel to plan and device ways to nullify risks. Companies have to develop systems to classify risks, identifying key risk indicators, conduct checks to see if the employees are taking the prescribed action to minimize risks. Planning risk management is not sufficient; the extent to which it is implemented is what matters. Both external and internal risks have to be identified. The ways to combat them have to be identified, by carefully listing the necessary action to be taken by employees to minimize the risk.
To customize enterprise risk management, companies have to analyze all aspects of their businesses carefully. They have to involve each department head, discuss and gather information, classify (market, credit and operational risk etc) and study the risks, use prescribed guidelines to form a detailed plan to manage the risks. They have to introduce policies and procedures to ensure each employee is implementing risk management techniques and periodically holding discussions to identify and device ways to combat new risks.
When risk management is part of the daily operations companies can combat and face risks more confidently. This is possible only if they customize enterprise risk management techniques.
Several companies offer their services to identify assess and manage risks factors and customize enterprise risk management. This could be an ideal option to those companies lacking experience as well as resources to implement risk management techniques.
There are firms that offer services as well as products to help new businesses succeed.
Alexander Gordon is a writer for www.smallbusinessconsulting.com - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.
Business Owners all across the country are joining “The Community of Small Business Owners" to receive and provide strategies, insight, tips, support and more on starting, managing, growing, and selling their businesses. As a member, you will have access to true Millionaire Business Owners who will provide strategies and tips from their real-life experiences.