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Oil and Gas Industry Risk Assessment

Business Risk Management: Ways to Tackle Potential Business Risks

What is business risk management?

Business risk management is a subset of risk management that is used to examine and understand the risk occurring due to changes in the processes, systems, or other business operations. A business risk framework identifies, tracks, prioritizes, and addresses risks to minimize adversities from unexpected events. Companies can gain the ability to make more informed risk-based decisions with the help of business risk management plan.

With a business risk management plan, businesses can prepare for the unexpected by minimizing risks and extra costs before they happen. By having a risk management plan in place, companies can also save money and make the organization’s future secure.

Identifying and tackling business risks is not an overnight task, it requires careful planning and strategic execution. Request a free proposal to know how we can help create an ideal business risk management framework for your organization.

Business risk management process

  • Identifying risks – Identifying the evolving risks by analyzing internal and external factors that affect the key business objectives.
  • Analyzing risks – It includes the standardization and creation of probability distributions of outcomes for each material risk.
  • Responding to risk – Once potential risks are identified and analyzed, an appropriate strategy needs to be incorporated to address the risk. This is done either by establishing new processes or eliminating the risk, depending on the type and severity of the risk.
  • Monitoring risk and opportunities – The final step in a business risk management process involves continually measuring the risks and opportunities of the business environment. Companies must also keep a check on the performance of different management strategies.

 

Business risk management challenges and how to overcome them

Speed of information

In an era where news and information travel faster than wildfire, businesses do not have the luxury of time to undertake decision-making and formulate strategies as a part of business risk management once the news of a risk event is released. In several cases, a single risk event is attached to other unrelated risk events and when combined it may rapidly begin to erode the organization’s reputation and goodwill. To address such situations, some organizations are working proactively to consider their organization’s responses and business risk management strategies more robustly and well in advance of an actual event. Having different response playbooks that have business risks management strategies and responses identified in advance helps them to quickly respond to risk issues and diffuse some of the adverse effects on a timely basis.

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Complexity of business

Cyber threats, disruptive innovation, regulatory shifts, and changing social demographics may trigger significant risks for an organization. Furthermore, these risk drivers may be related to or can trigger other risks, adding to the complexity of the business risk management challenge.  Despite this, the top management in most companies fail to recognize the value of embracing a more holistic and team-based enterprise-wide approach to risk assessment and mitigation. To overcome such setbacks, some organizations are rethinking how they approach risk identification and assessment to find ways to bring together the collective minds of a number of individuals to think through potential risk drivers explicitly and proactively. This is done based on the perceived benefits of putting several minds to work when identifying and assessing risks. It is essential to have varied perspectives on complex risk issues in order to face the realities of today’s complex business environment.

Integration of risk oversight and strategy

Some organizations may experience a disconnect between their organization’s business risk management and strategic planning activities. In many companies, business risk management is viewed as a compliance or regulatory activity. This means that often risk management in organizations are transferred to a lower level, non-strategic position. As a result, the organization’s business risk management efforts are often inadequately integrated with strategic planning. To address this challenge, rather than starting off by analyzing what drives value for the organization, companies must first understand what risks are on the horizon. By starting the conversation with what is strategically important to the business and then asking what might prevent that from succeeding, business leaders will be able to identify how business risk management can be positioned to provide strategic value.

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financial risk assessment

Infiniti’s Financial Risk Assessment Solution Helped a Manufacturing Firm Effectively Manage Risks and Enhance their Profit Margin by 22%

Today, manufacturing is no longer simply about making products. The recent technological advancements and the evolving customer demands have made it imperative for companies in the manufacturing industry to explore new ways of capturing market value. With this, companies in the manufacturing industry are under relentless pressure to enhance speed to market and customer engagement.

But, like all other industries, the manufacturing industry is also not free of risks. Some of these risks potentially destroy the business, whereas others cause serious damage that can be costly. In this context, it becomes increasingly important for manufacturing companies to monitor and manage all types of qualitative as well as financial risks in the industry. With over 15 years of expertise, Infiniti Research has helped many companies to identify potential risks in the industry and formulate actionable plans to mitigate them.

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Business Challenge

The client is a well-known manufacturing firm based out of Europe. The client was facing challenges in identifying the potential risks impeding their business growth. Some of the factors causing risks were delays from transportation, issues with third-party vendors, tariff wars, security threats, and workforce management challenges. All these risks not only affected the productivity of the company but resulted in financial losses for the client.Subsequently, , the company was not able to achieve their quarterly targets for 2 years consecutively. This affected the company’s gross profit.

Other challenges faced by the client were:

  • The supply chain disruptions were causing major challenges for the client. These delays occurred due to transportation issues and quality control issues with suppliers. Therefore, with Infiniti’s financial risk assessment solution, the client wanted to identify these supply chain risks before they impact the company’s bottom line.
  • As cyber risks posed challenges for major manufacturing companies operating in and around Europe, the client wanted to monitor the security threats and mitigate them.
  • The client also encountered difficulties in staff management and succession planning. As staff management was essential to keep the business running smoothly, the client wanted to evaluate the workforce risks.

With Infiniti’s financial risk assessment solution, the client wanted to identify all the risks affecting the company and make actionable plans to mitigate them.

Solutions Offered and Value Delivered

The experts at Infiniti Research thoroughly analyzed the client’s historical sales data, factors affecting their sales, and major risks facing the company. In the initial phase, the experts analyzed the risks that the business is exposed to in its operational environment. The second phase included analyzing the link between these risks and different factors within the organization. They also carried out a comprehensive analysis of the severity of the risks and how it affected the business functions. The final phase of the financial risk assessment engagement involved prioritizing the risks based on its severity and managing them individually.

With Infiniti’s financial risk assessment solution, the client was able to identify all the risks affecting their organization and prioritize them according to their severity. Infiniti’s financial risk assessment solution also helped the client to understand all the factors affecting their supply chain delays. This helped them undertake the necessary steps to effectively meet the demands of their products. Consequently, they were able to reduce over-stocks and stock-outs. The experts also helped the client to identify all the cybersecurity threats facing their company. Infiniti’s financial risk assessment solution helped them to protect all their critical data. Also, the financial risk assessment engagement helped the client to understand the workforce management challenges and mitigate them.

Furthermore, with Infiniti’s financial risk assessment engagement, the client was able to:

  • Make accurate market forecasts based on patterns derived from historical sales
  • Closely monitor the movements in the market and anticipate activities that could potentially affect the financial aspect of the company
  • Effectively segregate the tasks to prevent possibilities of fraud and internal threats
  • Identify periods of low cash inflows and effectively plan budgets accordingly

With Infiniti’s financial risk assessment solution, the client was able to make better financial planning and meet their quarterly target. Eventually, this resulted in an increase in profit margin by 22%.

A key step to managing your company’s risk is by conducting a comprehensive financial risk assessment. Request a FREE proposal to know how our engagement can help you mitigate the industry risks.

How do you conduct a financial risk assessment?

Financial risk assessment involves a detailed analysis of potential risks affecting the organization. A well-devised financial risk assessment process supports companies in identifying the risks in the industry and provides an opportunity to mitigate the risks that are most likely to occur. Having a financial risk assessment strategy will help companies to prepare themselves financially for the most likely risks in the industry.

There are three basic steps in financial risk assessment.

Gathering industry data – The initial process in financial risks assessment process involves gathering industry-specific data. This involves gathering information about the company structure, client base, third party engagement, and more. The information collected from these sources will help companies understand risks associated with each sector of the organization.

Interviewing key stakeholders – The company should identify key stakeholders in the industry. Gathering information from them will help companies categorize the common risks in the market and prioritize them. By closely monitoring the key competitors, organizations can identify the risk mitigation strategies employed by them.

Documenting the report – The final step in financial risk assessment process involves documenting the findings and developing recommendations for mitigating the industry risk.

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Market Intelligence

Assessing Potential Market Risks for a Machinery Manufacturer – Risk Assessment Study by Infiniti Research

Business Challenge 

Manufacturers invest millions of dollars in resources such as machinery, tools, workforce, products, and more. While these resources are necessary for manufacturing companies, they also pose risks for manufacturers. Smallest risks in operations, ranging from theft and property damage to workforce disruptions and natural disasters can heavily impact not only a manufacturer’s bottom line but their ability to deliver goods for clients on time and on budget.

A leading machinery manufacturer in Canada wanted to develop a new strategy to manage risks affecting the growth of the industry and implement appropriate policies and organizational structures to achieve their strategic objectives.

With years of expertise in offering a actionable risk assessment solutions, Infiniti helps manufacturers to devise an effective risk assessment strategy. Request for a FREE brochure to know more about our services.

 

Top Challenges Faced by Machinery Manufacturers 

Problem Statement 1: Commodity and raw material prices

Changes in the prices of raw materials raised the cost of production. This left no other choice for the organization but to raise their prices. In fact, the rise in prices affected their sales and reputation.

Problem Statement 2: Changes in laws and regulations

Changes in laws and legislation, such as minimum wage laws and overtime regulations increased costs rapidly. With Infiniti’s risk assessment solutions, the client wanted to stay prepared to face sudden transitions.

Problem Statement 3: Economic conditions

An overall recession or economic boom can influence the availability and prices of materials, consumers’ buyer behaviors, labor availabilities, and more. Hence, with the help of Infiniti’s risk assessment solution, the client wanted to understand the industry landscape thoroughly.

Problem Statement 4: Threats to international operations 

The client was looking out to export their products to international markets such as the US and UK. But the changes in international trade agreements such as the US pulling out of NAFTA and the UK leaving the European Union were impacting manufacturing companies. The client, therefore, wanted to understand threats to international operations before making the market entry.

Interested to develop a risk assessment plan to deal with unexpected risks and stay ahead of your competitors.

Our risk assessment solutions can help. Request for a FREE proposal.

Solutions Offered and Value Delivered 

Phase 1: Market analysis

By conducting interviews and discussions with leading market players in the industry, the experts at Infiniti Research helped the client understand price fluctuations. This helped them better manage their production process and deliver machineries on time.

Phase 2: Identifying changes in laws and regulations

By analyzing changes in regulations and laws in the US and UK, the experts at Infiniti Research helped the client make better business decisions. This further helped them manage their workers.

Phase 3: Sales forecasting

The experts helped the client calculate the average sales rate for the next five years. Also, with the help of Infiniti’s industry risk assessment solution, the client was able to gain a thorough understanding of the industry landscape.

With Infiniti’s risk assessment solution, the client was able to identify factors impeding market growth and implement an effective risk management strategy. Also, with the help of our industry risk assessment engagement, the client was able to monitor their market attractiveness. This further helped them to make checklists of potential risks and further devise effective measures to reduce bottlenecks and enhance their overall business efficiency.

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