 |
|
|
“This will help such organisations cover the complete hierarchy of operational risks,” Seetharaman said in the context of Doha Bank holding a knowledge-sharing session today on ‘Enterprise risk integration’.
Enterprise Risk Management (ERM) emerged as a structured approach combining strategies, resources, technology, and knowledge to assess and manage the uncertainties that various enterprises face as value is being generated ERM facilitates effective management of risks that organisations face, and the management of potential opportunities embedded in those risks.
Highlighting the link between ERM and ‘business model risk,’ Seetharaman said a critical aspect of management responsibility is to understand and determine which risks should be taken on, and what magnitude of business consequences (in case of a failure) can be managed.
Different risk categories and their impact on business levels should be included in strategy setting. The identification of the portfolio of key risks facing organisations and their evaluation are crucial steps in the process of designing an effective ERM framework.
In order to build enterprise risk awareness and ingrain it deeply into the organisational culture and processes, it becomes essential to encourage open communication between all employees and inspire interest in ERM best practices.
Risks arising from external environment should be devoted more attention, as it is more unpredictable.
On key supply chain risks, he said companies’ supply chains may face a host of perils, including labour disputes, terrorism, energy price hikes and natural disasters. However, disruptions associated with the effects of the recession have had the most impact on supply chains.
At the top of their concerns for the next 12 months are unfavourable exchange-rate fluctuations, followed closely by fears over input and energy price hikes.
The recent currency war globally adds this risk, Seetharaman said.
The spike in oil price also impacts industries such as airlines and logistics. Protectionism, he said, is also a concern. Key IT risks include criminal attacks, weaknesses in infrastructure, tougher statutory environment- cyber laws among others.
Reputation management is emerging as a key issue for all enterprises, Seetharaman said.
“Managing reputation is therefore an essential part of the strategic role of the board of directors, who must take into account all stakeholders, whose perception of the organisation will determine its reputation. Risks or uncertainties, both positive and negative, must be managed with a holistic systemic approach, as there is no such thing as reputation risks -- rather, all risks may impact on reputation,” the Doha Bank Group CEO said.