RISK

Challenges in Developing Corporate Risk Management

Challenges in Developing Corporate Risk Management

Introduction

Risk management includes the generation, assessment, evaluation and selection of appropriate risk reduction options as well as implementing the selected measures, monitoring their effectiveness and reviewing the decision if necessary. Notwithstanding the public debate on the benefits and risks of all the various applications of nanotechnology, companies developing or marketing products based on nanotechnologies or including nonmaterial's are legally obliged to guarantee that their products are safe and that they do not cause any harm to humans, animals or the environment. In a situation in which risk assessment protocols are in the stage of development and potential societal impacts are still uncertain there is a need for promulgating internationally binding guidelines for a responsible and precautionary risk management. (Mehr ,Hedges ,1964)

Discussion

Risk management is a new wave in the corporate world. But it is a very advance concept and as we all know advance things on one hand gives us some benefits but on the other hand there are always some complication , which are in the their way(International Risk Management Institute,2008).

Challenges in Developing Risk management Capabilities

Following are some of the challenges that organization faces while seeking to develop risk management capabilities.

Providing Internal Control

According to the research, the risk which hurts any organization the most is the “Operational risk”, and these operational risk have mostly internal source. By internal source I mean the probability of loss because of some organization ineffectiveness in managing its internal operations. So, it is a challenge for an any organization to firstly have a firm control over its internal operation and only then moves toward developing the proper and sophisticated Risk management capabilities. Developing risk management capabilities is useless without having an effective and efficient internal control over the operation. As both these two concept are correlated because developing risk management capabilities will also become just a one part of overall internal operations. (Crouhy et.al,2001)

To Improve Corporate Governance

In simple words Corporate Governance is “Good Governance”. Corporate governance is required at another level while seeking to develop risk management capabilities. Risk governance deals with the identification, assessment, management, and communication of risks in a broad context. It includes the totality of actors, rules, conventions, processes, and mechanisms and is concerned with how relevant risk information is collected, analyzed and communicated, and how management decisions are taken. It applies the principles of good governance to the handling of risk. Especially in complex situations of uncertainty risk governance can provide guidance for proactive and integrated decision making and regulation(Buehler et.al,2008).

Competency of Management

In the eyes of the market, there are some favored companies with high shareholder values which are characterized as "high trust" companies - that is today the market trusts the management team of these companies, and even allows that management team to experience some unforeseen bumps before taking action. However, if the market starts to perceive the company as "risky", with an ill-defined focus, poor record of execution, unpleasant surprises - it demands a premium from that company in ...