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The balance between risk and reward is the very essence of business: you have to take risks
in order to generate returns and, generally speaking, higher returns involve greater risks.
However, there is a difference between risks taken as a result of careful judgement and
those taken unwittingly.
In a world of increasing complexity and uncertainty, companies must manage risk
more rigorously than ever. It is an essential aspect of good corporate governance today.
Surprisingly, however, I believe many still fail to do so, perhaps because they are overwhelmed
by the size of the task or because they feel impotent in tackling it. Even more
worrying, some remain blissfully unaware of the risks they face.
Every single business is surrounded by risks, many of which are identifiable and manageable.
Cash flow and credit management, for example, are two of the greatest causes of
business failure when mishandled. Many other risks have grown in recent times: reputational
risk, the vulnerability of IT systems to viruses and hackers, and physical threat all
feature among them.
Those companies that take a logical and structured approach to business risks are
much more likely to survive and prosper. They can also benefit from a reduction in costs
and insurance premiums.
The need for companies to develop robust risk management strategies is clear. Used
effectively, they enable businesses to identify possible threats — legal, financial, environmental,
operational — and to introduce systematic plans for mitigation.
I believe this book will help companies develop a sound strategy for managing business
risks, reducing their vulnerability to threats, both present and future. Such a strategy
will also assist in the day-to-day management of the business. |
