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             22 January, 2021
 

    
Category:  Articles » Finances » Credit

 

Risk Management Through To 2009.

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         Views: 1878
2009-05-04 03:12:12     
Article by Tal Gur

Risk management is a term that originated in the insurance industry back in the 1900's, and was used by those selling insurance services to describe how a person, or company, could reduce or mitigate the risk they, their families or company management may be exposed to.

The term "risk management" expanded into common day usage in other areas of business, during the 1970's, and continues today across a broad range of services and industries to describe the policy and practices used to determine and manage the degree of risk in any area of a person's or company's day to day operations.

This can and does vary from financial, personal, health, property, travel, security, manufacturing and quality control to name just a few, and GCS Group is a leader in assisting risk managers to formulate work place practices that will mitigate the risk they and their companies face in an ever increasing complex world.

And "increasingly complex" describes perfectly, the problems being faced by risk and compliance managers in 2009 as they seek to identify, and implement programs that will mitigate the risk they face to acceptable levels.

There are an increasing number of companies now offering risk management consulting services, many started by people with different skills and qualifications, who come from a security, police, military, legal, accounting and insurance background, and so it is essential the risk or compliance manager satisfy themselves that those they are relying on to assist in the development and implementation of their strategies have the necessary skill sets in the fields they seek to provide the necessary risk management strategies.

A consultant with a high level of knowledge, skills and qualifications in the security industry, will not necessarily have the required skills to put in place risk management practices that will protect a company's financial position.

Equally, whilst a licensed Financial Planner may be able to assist the individual in putting in placed strategies to protect their wealth and assets, or an experienced accountant can provide assistance in mitigating financial risk to a company, they would not normally have the necessary skills to develop risk management programs that would provide cover to top executives who travel frequently on an international basis.

A classic example is where a South African company had enjoyed two stellar years, with high profits and the chairman and board wanted to reward their middle and senior management with a holiday for them and their partners in a renowned holiday location in the south of France.

With little consideration to the devastating impact the loss of such a team would have
on the company, the Chief Financial Officer, thinking he was doing the right thing and saving the company money, negotiated a package with a charter airline, for the entire team and partners to travel on a 747 Jumbo.

Subsequent enquiries implemented by the company's security manager proved the charter airline company had a poor service record, had lost two aircraft and their insurers had served notice of discontinuance. Fortunately this information was established prior to the trip being taken.

In addition to changing flight arrangements to a proven reliable airline, a decision was reached to have the group travel on three separate flights so in the event of a loss of aircraft, the company would not lose their entire management structure.
This matter became a case study for those entering and / or working in risk management and highlights how essential it is to have an agreed risk management strategy understood and supported by all within a company's management team.

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