RSS FeedBy M. Isi Eromosele
To align and integrate risk management into its existing internal processes, a firm must establish a risk management framework and translate its guidance into tools and processes.
This would provide the firm with a better structure for risk identification and resource allocation in addition to efficient decision-making process. The Oseme Finance solution runs through five phases:
Phase I - Risk Context
The basic parameters within risk management are defined here and management perimeters are formulated by the risk manager. The key goal here is to ensure that the firm is wholesomely prepared to mitigate any series of risks that may be identified moving forward.
As such, within the risk context that is set up, a strict plan is set up to protect assets and/or systems that are vital to the firm’s business operations.
The risk context is set up to determine the risk criteria under which the firm would be assessed. Different levels of criteria would used to make decisions as to which kind of risk mitigation action would be needed for various business units within the firm.
Phase II - Risk Identification
Sources of risks and other negative events that may affect business operations are identified. Risk managers then identify risks by utilizing specific libraries of pre-defined risks associated with business functions within the industry the firm operates in.
Automated work flows are set up to authenticate proposed risks through appropriate review and approval channels. In order for the firm to identify its true risk profile, a wholesome top down approach to risk identification and tracking is formulated and put in place.
Phase III - Risk Analysis and Evaluation
The level of risk vulnerability is analyzed and the likelihood of potential damage is determined. User scalable qualitative and quantitative analysis models are used to score risk against context specific criteria.
Once risk is analyzed, the findings are evaluated, using comparison of the level of risk found during the analysis stage with the risk criteria that has been established when context was defined.
This exercise allows managers to ascertain which risks would need priority attention, enabling them to establish treatment priorities.
Phase IV - Risk Response
After the important risks have been identified, treatment plans are formulated for each one. This is a necessary proactive move that prepares the firm for whenever a risk incidence occurs.
This phase enables the firm to create an incident and response history. This is vital because widespread absence of historical data limits the applicability of data-driven risk diagnosis tools such as regression analysis or Monte Carlo solutions.
Phase V - Risk Monitoring and Review
Continuous reviews and evaluations are necessary to ensure the long-term relevance of the formulated treatment plan. Control indicators will act as early warning signals that serve as alarms to alert managers when risk events are approaching.
Unparalleled levels of instability and uncertainty in the business world exposes firms to a high level of risk events. Despite high levels of investment, many firms have failed in their attempts to predict the impact of risk on their business operations. It is time to try a new approach.
M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance
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