Why Organizations Have The Right Controls Set Up

The purpose of risk assessment is not to remove risks, but to take reasonable steps to reduce them. The process involves looking at the risk, and considering what can be done to make it less likely that the risk will develop into a reality. This can be done through implementing policies and codes of practice, acting in individual’s best interests, fostering culture of openness and support being consistent, maintaining professional boundaries and following systems for raising concerns.

The idea of “risk” is used in many fields and industries. There has been large efforts made towards the understanding of risk. Since, risk varies so much depending on the field of study, the need for learning about it is warranted. As can be imagined, the importance of risk in a market economy is crucial. In the 1990s, JP Morgan made the Value at Risk (VaR) a central component of its work efforts (Cecilia-Nicoleta, Anne-Marie, & Carmen-Maria, 2011).

Effective planning & execution of risk assessment procedure in all financial & operating sectors to identify potential risk to organization.

Risk assessments are used to identify potential harm to an individual or persons. This identifies the possibility of a hazards and helps to reduce the possibility of harm, they are put in place to safeguard individuals. Risk assessments are reviewed and can be added to or changed if necessary

Risk management is a process for identifying, assessing and prioritizing risks of different kinds. Once the risks are identified, the risk manager will create a plan to minimize or eliminate the impact of negative events. A variety of strategies is available, depending on the type of risk and the type of business. There are a number of risk management standards including those developed by the Project Management Institute the International Organization for Standardization the National Institute of Science and Technology and actuarial societies. Organizations uses different strategies in proper management of future events such as risk assumption, risk avoidance,

The assessments must cover the details of the risk, who might be affected, the likelihood of occurrence, the severity of the risk, a risk rating, controls and contingencies.

business: Managing risk in a complex and connected world. Revue Management & Avenir, (74), 159-173. Retrieved from Business Source Complete Database.

2. The purpose of “Risk Assessment” is to identify organizational risks, analyze their potential in terms of costs and likelihood of occurrence, and install those controls whose projected benefits outweigh their costs (Bagranoff, Simkin, and Strand 2005, 111).

Risk Assessment Every entity faces a variety of risks from external and internal sources that must be assessed. A precondition to risk assessment is establishment of objectives, linked at different levels and internally consistent. Risk assessment is the identification and analysis of relevant risks to achievement of the objectives, forming a basis for determining how the risks should be managed. Because economic, industry, regulatory and operating conditions will continue to change, mechanisms are needed to identify and deal with the special risks associated with change. Control Activities Control activities are the policies and procedures that help ensure management directives are carried out. They help ensure that necessary actions are taken to address risks to achievement of the entity's objectives. Control activities occur throughout the organization, at all levels and in all functions. They include a range of activities as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets and segregation of duties. Information and Communication Pertinent information must be identified, captured and communicated in a form and timeframe that enable people to carry out their responsibilities. Information systems produce reports, containing operational, financial and compliance-related information, that make it possible to run and control the business. They deal

Historically, the objective of risk management was to stabilize the company financial health, improve its capital structure, and establish strategies to prevent losses and financial crisis. Today, risk management requires more diligence, ethics, subjective knowledge, and independence. Companies adopt risk management policies due to complexity of financial markets, executives’ risk appetite, greater transparency with investors and rating agencies, and perceived conflict of interests.

There are all types of risks involved if one is small business manager or a manager of a larger corporation. The responsibilities on a day-to-day basis can be vital towards the success of the organization. The company facilities can be associated with working capital, production, and sales. The manager would need to reflect a common awareness of the potential risks that can be involved. Although, there can always be a risk involved in an organization, the manager would and should have the capability to identify the type of risks that the company can surface. In this paper, one will provide a further explanation on the various risks and along with presenting a way for financial managers on a moderate approach towards these risks.

“Risk is defined as the potential of losing or gaining something of important value. Values can be gained or lost when taking risk resulting from a given action or inaction, foreseen or unforeseen” (Kungwani, 2014 ). Some argue that this simple definition was not understood until 2008, in which the global banking crisis cried out a global need for stringent risk management practices to be put in place across all organization not matter how big or small they may be. A strong, healthy and resilient banking system is key to economic prosperity, progress and development as banks are often at the forefront between investors and savers. However, in 2008 the once resilient banking system came to a great tumbling collapse due several key failures

The complexity of modern organization requires a way to pre-plan and assess situations that may be detrimental to the organization. Risk management is one way to identify issues that may occur to disrupt business; to assess in detail the quality and quantity of those risks, and to prioritize how managing those risks can contribute to the organization's overall success. The purpose of risk management is to be proactive in improving places or processes within an organization that may have risks that can be mitigated or controlled and to do something to minimize those risks and the financial exposure to them. In almost any organization, there are potentials for risk within a construction project there may be supply or labor issues; within a small business stock, weather or employee issues; or in other organizations uncertainty in markets, legal issues, credit risks, accidents, natural causes or disasters, deliberate competitive attacks, and a host of other unpredictable cases. So rife are risks for organizations, that standard and have been developed by national and international bodies, insurance agencies, and regulatory agencies to help organizations identify and minimize risk (International Organization for Standardization, 2009).

Problems of risk management are very much on the agenda in banking and finance. There is a

Risk management processes are, unquestionably, very thorny and delicate enterprise issues to tackle. They are crucial methods and techniques employed by firms or corporate organizations to contain the likely risks and afterward used to seize possible opportunities related to achieving their respective objectives. They are the central elements of corporate governance. According to Anantatmula and Fan (2013), these approaches or processes have changed largely in the past 25 years, particularly towards the end of the 20th century. For instance, during the 1980s and 1990s, there was a reported decisive revolution in corporate risk management. Many companies primarily employed more risk managers, which imperatively served to identify probable hazards. Moreover, the scope of risk management was limited to insurance purchases. Managers were blindly made to believe that financial management is the only way forward to ensuring that organizations registered profits. It was then referred to as “selective hedging”. The fundamental aim of such hedging was crucially directed at smoothening corporate profit and loss financial statements. However, with the main developments in enterprise risk management, contemporary studies focus on the wider perspective of governance.