Knowledge - Special subject

Risk management and the lessons of CEO

According to experts, risk management is a process of review, a comprehensive assessment of the activities of enterprises to identify potential risks may adversely affect the operation of enterprises.

On that basis, the business will offer solutions to respond, appropriate precautions corresponding to each risk. Therefore, risk management is an integral part of business strategy.

Risk Management will help companies control the flow of life, growth and survival of businesses in a permanent competitive environment.

And in a volatile economy, as now, the identification of challenges, anticipate the risks and control, administration and business operations is critical for business leaders.

But, in fact, there are so many mistakes in recognizing the role and how to implement risk management.

For many companies, risk management active is understood simply as the use of insurance services to help companies avoid losses when the problem occurred.

So they choose to use insurance services and see as well and fully implement the management of risk. Others see the important role of risk management but improper conduct leading to unexpected results.

Dr. Tran Quang Thang, director of the Institute of Economics and Management (IEM), says there are many reasons why risk management is not effective.

Firstly, it is because leaders have governance and communication skills poor command. Secondly leaders are anxious to take risks while lacking the ability to perform risk management for the company.

Not only that, they also accept the lack of transparency in these high-risk areas. Because of the lack of information for decision making board of directors have less profound insight about what is really happening or likely to happen.

Even, many leaders are not integrated risk management with strategy development and performance management.

7 steps to end the risks

According to Nguyen Dang Duy Nhat, President of CMO in Vietnam, there are 7 steps toeffective risk management. It is identifiable and familiar faces risks; Setting objectives and risk management strategies; building a system of procedures and processes of risk management; develop capable team of risk management; Building corporate culture "ready to cope with risks"; Improving the efficiency of the internal audit activity; CEO and board of directors must be equipped with risk management capabilities.

But in order to this operation is effective, besides the construction risk management policy, business leaders themselves have pledged to support the deployment, ensuring non-existent concept of "forbidden zone" in enterprises, areas without access assessment and control.

At the same time, business leaders have to really appreciate the work of information, propaganda and training to build a culture of risk management to every object in the enterprise.

According to Mr. Dang Duc Thanh, general director JSC International Business Intellectuals in difficult trading conditions at present, business leaders must prepare one's mind and bravery adaptive response to changes, negative fluctuations.

Moreover, companies must develop a plan, schedule of risk management; reviewing all business operations, adjust plans fit the new situation.

In parallel, to cut and reduce the operational costs in the spirit of saving; Adjusting the portfolio; Changing mindsets and investment leaders in internally work.

Along this claim, Mr. Luong Van Tu, former chief negotiator of Vietnam joining WTO, said that to enterprises developing in the best way, business leaders must know to build and manage development strategies; HR management, construction and training of qualified staff to meet the business objectives.

And especially to know how to manage the risk management occurs when the fluctuations of the business environment as the change of law, the policy mechanism, the volatility of the market, the environment, personnel changes...

This is a very important factor determining the sustainability of a business. "Because, assess a talented manager or not is not only based on the business results of enterprises managed by that person, but also on the ability and experience of overcoming challenges as the market has significant changes "Mr. Tu said.

By now, the enterprise management should seriously acknowledge the role of risk management activities. Need to consider, establish and maintain a risk management system for their enterprises. Once risks are anticipated, companies can fully develop and implement an effective response plan.


  Source: Saigon Entrepreneur


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