To maximize their physical assets, and to ensure they provide the highest ROI, businesses require a thorough understanding of their assets and the risks associated with them. Without a thorough understanding of the risk environment businesses could make rash decisions that could harm their bottom line. Insufficiently implemented asset and risk management process can expose businesses to costly regulatory fines or loss of profits because of insufficient planning for the unforeseeable.
The most common and significant issues affecting the management of risk and assets are:
Unawareness of the capabilities of the assets of an organization – For instance, employees might not be aware that an item can perform a job outside the scope of its design or how to operate it to maximum efficiency. This can lead to underutilisation of the asset and a decreased ROI throughout its lifetime. This can be mitigated by ensuring employees are properly trained to understand an asset’s capabilities and how to utilize them in a way that is appropriate.
Lack of robust risk management system – since the financial crisis, many firms have had little time to think about strategic risk. This has led to inadequate risk management strategies, ineffective risk assessments and missed opportunities to maximize the assets of an organization.
Third-party Risk – From cyber-security to integrity of data, and reputational damage can have significant consequences for an organization. To mitigate this type risk, a robust verification process involving failsafe procedures should be put in place to ensure that all vendors have been properly approved.
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