VersiTrax The Bedrock of Risk Management

The Bedrock of Risk Management

Whether you are a director or manager, you will need to make a decision that has an element of risk in it. Risk has two parts; the possibility of something going wrong and the negative effects if it happens. This is when risk analysis becomes important to compliance or the success of any business.

Risk Analysis: Identifying Threats

This is a process that enables you to determine and manage potential problems that may undermine compliance to insurance or any initiative that your company starts. To begin a viable and successful risk analysis, you must first determine potential threats and make an informed estimate of the likelihood that these may occur. Some of these are:

  1. Human – loss of a key individual, injury, death, illness and others
  2. Reputational – loss of employee or client confidence, or damage to market reputation
  3. Procedural – failures in internal systems, controls, accountability or fraud
  4. Financial – stock fluctuations, failure of business, changes in interest rates or lack of funding
  5. Technical – use of software or lack of it, innovations in technology or technical failure

These potential threats may lead you to changing your risk management strategy. In such cases, tools like the SWOT (Strength, Weaknesses, Opportunities, and Threats), Failure Mode and Effects, and Scenario Analysis enables you to mitigate or avoid some of the risk.

After identifying potential threats, you need to estimate both their likelihood and their possible effects. The equation for this is:

Risk Value = Probability of Event x Cost of Event

At some point in your business’ progress, you will run into risk. You need to make the right decision based on your company’s values, plan for the future and current resources.

Why Choose Versitrax

Versitrax has more than 15 years of experience in the risk management and insurance industries. We established our company with a clear vision of providing organizations with a solution that is innovative, precise, reliable and secure to simplify their needs for risk mitigation and compliance.

If you need a risk management solution, contact us. We have the expertise and experience to assist you.

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