Risk management is a preventive measure to avoid instability in the business. Even so, there is still resistance to adopting this procedure. One of the reasons is the lack of corporate culture, which is an obstacle to be overcome.
To start changing this scenario, you need to adopt 3 attitudes:
establishment of processes
process mapping
identification of rules that must be followed
Each of these elements is complemented by the work of the other, because they must all have the same focus. However, it is necessary to have integrated work from several areas , to carry out an audit to saudi arabia whatsapp data confirm good practices and adjust where necessary, in addition to following the international standard.
This can only be achieved when managers understand the processes and are aware of the risks inherent to these activities. This changes the current market paradigm, which is to work in a corrective rather than preventive manner.
In reality, what should happen is to act with risk management to opt for prevention. This action is based on 3 steps:
Identification and classification
This stage involves defining internal and external events that may influence business and banking operations. Risk must be classified and continually monitored and improved to prevent it.
Assessment
The definition of the treatment provided to the risk involves determining the potential of its effect, that is, the degree of exposure of the bank to that threat. This is also the time to analyze the probabilities of loss occurring and the impact on the financial institution.
Treatment
At this point, you can either avoid or accept the risk. In the first case, you make the decision not to get involved, and in the second, you act in a way that will help you get out of the risky situation:
In the second situation, there are 4 options:
retain – maintain the risk at the current level of probability and impact
reduce – take action to reduce the likelihood and/or impact of the risk
transfer – take actions to decrease the impact and/or likelihood of the risk occurring through transfer
exploit – increase the level of exposure to risk in order to try to gain a competitive advantage
These actions must be taken on a case-by-case basis. This depends largely on daily operations and the characteristics of the situations.