What lessons have we learned on how to manage business risk?

David Hunter,
Beever & Struthers

Risk Management has always been a Cinderella subject, enthusiastically engaged in by those who have seen the light and treated as an unnecessary burden by those who have not.

The financial crisis has created an environment where some of those not previously engaged have been smacked in the face by their lack of preparedness.

As a provider of business assurance and risk management advice, it is good to see new converts, but it is a shame that it comes at such a heavy price with slash and burn reaction to economic downturn resulting in redundancies or even the collapse of the business.

For those who survive, there does seem to be an increasing awareness of the need to match risk appetite with a capability to manage the consequences of decisions and to invest in risk management advisory services.
The key areas we have seen demand for assistance on are:

Loan/banking arrangements and covenant compliance, particularly loan margin re-pricing
Tighter control over expenditure – cutting out the excess but still ensuring key objectives can be delivered and performance maintained.
Customer Care – know what your customers want and make sure you deliver it to protect your market share and client base.
Anti-fraud – fraud is out there and is only increasing as the recession continues. As a result, being aware of your fraud risk areas is crucial.
Risk Management Training – as organisations seek to understand their changing risk profile, they emerge from the recession stronger than they went in.

In short, if businesses don't evaluate why they are successful when times are good then they won't know what to do to be successful when times are bad....... organisations need to understand what the key drivers for their business are and how managing risk can help them achieve their objectives.