Corporate Risk Management is a strategy that analyzes the entire company or organization in order to identify, assess and prepare for losses that could interfere with the organization’s operations and objectives.
Corporate Risk Management is a process of identifying and methodically approaching potential events that pose risks to the achievement of strategic objectives, or opportunities to gain competitive advantage.
Risk management is an essential element of any company’s strategic management, and should be incorporated into ongoing business activities.
Type of Risks
Financial risks: refer to risks directly related to capital. Where the Treasury, Credit and Cost controls are included. As well as Financial integrity.
Strategic risks: are risks that affect or are created by corporate strategic decisions.
Regulatory risks: related to compliance with laws and regulations, as well as continuous regulatory changes, monitoring and analyzing possible flaws in the structure.
Key elements of a risk management process
Risk management follows a very distinct and continuous process, where it actively identifies and reassesses the various risks to ensure the company’s financial security. The process includes five specific steps:
Risk Management Standards
A number of standards have been developed around the world to help organizations implement risk management systematically and effectively. These standards seek to establish a common vision of structures, processes and practices, and are generally defined by internationally recognized bodies.
Risk management is a fast-moving discipline, and standards are regularly supplemented and updated.
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