What is risk management?
A certain amount of risk is inevitable in any business. Working with partners and suppliers, employing staff, launching new products, competing with other businesses and expanding into new markets all open you up to some level of risk. The question is, how much risk probability can you afford to take with your business?
Risk management is the practice of pinpointing potential risks ahead of time, then evaluating, prioritizing and taking steps to mitigate or avoid risk altogether. Effective risk management involves putting processes in place for:
- conducting thorough background research
- protecting your digital assets, such as proprietary data, intellectual property and customers’ private information
- complying with standards, regulations, laws and codes of practice.
By closely monitoring and minimizing risk probability, you can reduce the likelihood of negatively impacting your operations and maximize your business continuity.
What is Risk Assessment?
In the business world, risk comes with the territory. Whether you’re considering partnerships or new suppliers, hiring staff, facing tough competitors, expanding into other markets or countries, launching a new product or investing in the latest technologies, a certain degree of risk avoidance.
That’s why risk avoidance assessment is key to a robust business strategy. Risk assessment is a process of gauging potential hazards for your business activities and determining the possible consequences should those hazards occur. In other words, it’s about looking at what can go wrong before it goes wrong so you can best prepare for and try to mitigate the danger to your organisation.
Companies use risk assessment as part of an overall project risk-management scheme to reduce business continuity risks, develop contingency plans for facing risks directly and establish disaster-recovery plans if the need arises.
Following risk assessment, it’s important for companies to have a risk-mitigation process in place. Risk mitigation, another component of risk management, is not about avoiding risk altogether – again, in business, a certain amount of risk is inevitable. Instead, risk mitigation strategy is a preventative process for preparing for all potential risks and reducing the impact of these threats.
To lessen adverse effects to your organisation, a good project risk-mitigation strategy process typically involves screening and evaluating each threat, performing due diligence and necessary investigations, and ongoing monitoring of prospective dangers.
Types of business risk
- Strategic risk acceptance is risk that could keep your company from achieving its strategic goals and objectives.
- Financial risk concerns fiscal transactions and your financial systems
- Compliance risk refers to the necessity to adhere to standards, codes of practice, regulations and laws.
- Operational risk involves your administrative and operational policies and procedures.
- Environmental risk relates to external incidents that are often beyond your control, such as natural disasters, inclement weather and uncertain economic conditions.
- Reputational risk acceptance refers to public regard for your company.
Why is risk management so important?
Risk management is a key component of strong management and corporate governance. A strong risk-management plan allows you to prepare for the unforeseen and unknown, so you can mitigate risk, curtail costs to your organisation and protect the future of your business.
With robust risk management, you can:
- save time, money and assets
- protect people, property and the environment
- reduce legal liabilities
- bolster your operational stability.
The better your risk management, the stronger, faster and more assured your critical decision-making can be.
Manage Risk with our Solutions
Nexis Diligence+™ is a due diligence software/risk and compliance check tool that merges an unparalleled collection of global intelligence with user-friendly technology to help mitigate your business risk. It allows you to search premium business intelligence content, including:
- current and archival news dating back 40 years
- sanctions lists, watchlists and politically exposed person (PEP) lists
- executive, company and industry data
- in-depth risk analysis reports.
Nexis Diligence+ also integrates a Report Builder that enables you to maintain verifiable due diligence audit trails to help you satisfy regulatory requirements and remain compliant.
With the third party compliance risk management and due diligence software - Nexis Diligence+, you can better understand your customers, employees, partners, suppliers and competitors so you can manage risks that could disrupt your business. This due diligence software tool can also help you boost productivity, increase profitability, and inform and improve your decision-making.
Request a Free Trial here.
The tool provides access to:
- global watchlists
- sanctions lists
- politically exposed person (PEP) databases
- negative-news searches.
From these searches, you receive near-real-time results that enable you to make more informed business decisions and confidently move your business forward.
CleverKYC automates background checks, risk and compliance checks, strengthens your due-diligence practices and keeps you alert to compliance risk.
Ultimately, understanding and effectively managing your risk will help protect your business from financial, regulatory and reputational damage.
With LexisNexis’ comprehensive risk-assessment and risk-management solutions, you can properly arm your business operations against the unwelcome threats inherent in today’s global marketplace. With these tools in place and on the case, you can focus on what’s important – growing your company!
Frequently Asked Questions
Answers to some popular questions
What is risk management?
Risk management is the practice of pinpointing potential risks ahead of time, then evaluating, prioritizing, and taking steps to mitigate or avoid risk altogether.
What types of risk management are there?
A strong risk-management plan allows you to prepare for the unforeseen and unknown, so you can mitigate risk, curtail costs to your organisation and protect the future of your business. Various risk management solutions available are: 1. Nexis Diligence+™ 2. Batchnamecheck 3. Nexis Entity Insight
Why is risk management so important?
Understanding and effectively managing your risk will help protect your business from financial, regulatory and reputational damage.
What are the benefits of risk management?
With robust risk management, you can: 1. save time, money and assets 2. protect people, property and the environment 3. reduce legal liabilities 4. bolster your operational stability.
What are risk management programs?
To quantify, qualify, and mitigate specific concerns an organization may discover they utilize some risk management programs like PESTEL analysis.