Why risk management consulting important for businesses?
Risk management consulting is a crucial service for the operation and development of businesses. It not only helps businesses improve internal control limitations but also enhances effective management by identifying opportunities for improvement and turning these opportunities into business advantages. In this article, RSM Vietnam will analyze the significance of risk management for businesses and the benefits this service brings.
Table of contents:
What is risk management?
Why is risk management important for businesses?
How can risk management consulting services benefit businesses?
RSM Vietnam's Risk Management Consulting Services
1. What is risk management?
Risks can come from both internal and external factors within an organization. External risks are risks that are not directly under the control of the Board of Directors. They include political issues, exchange rates, interest rates, and more. On the other hand, internal risks encompass non-compliance or violations of regulations, loose internal control systems, inefficient operations, and more.
Risk management is the process of identifying, assessing, and controlling threats to an organization's capital and income. These risks can originate from various sources such as financial uncertainty, legal liability, technological issues, strategic management errors, accidents, and natural disasters. Risk management focuses on anticipating issues that may deviate from the plan and implementing measures to minimize risks to an acceptable level.
2. Why is risk management important for businesses?
Risk management is becoming increasingly crucial for every business. Nowadays, the risks that businesses face are growing more complex, especially with the rapid globalization trends. New risks continuously emerge, often linked to the use of digital technology.
Without risk management, a business may find it challenging to define its objectives for the future. When a business sets its goals without considering risks, it's highly likely to lose direction when confronted with potential threats in the future.
For a business, assessing and managing risks is the best way to prepare for situations that may arise during its development and growth. When a business assesses its plans to address potential threats and has measures in place to deal with risks, it becomes more likely to achieve success.
Furthermore, proactive risk management ensures that high-priority risks are addressed as early as possible. Additionally, management gains the necessary information to make informed decisions and ensures that business operations continue to be profitable.
3. How can risk management consulting services benefit businesses?
Helps minimize uncertainty
Uncertainty in any form can be detrimental to a business, and quantifying this factor is often challenging. Warren Buffett once said, "Risk comes from not knowing what you're doing." Therefore, understanding both the internal and external aspects of a business is an essential part of protecting your enterprise.
Helps businesses achieve successful business planning
Success in business comes from careful planning and its proper execution. When done correctly, risk management helps a business identify threats, thus reducing the likelihood of risks occurring and ensuring that the company's strategies yield positive results.
Helps businesses reduce costs and losses
Risks can be categorized based on their impact on a company's financial situation: income risks and cost risks. Any event or risk that reduces a business's productivity or its ability to provide services to customers will lead to income loss. Expanding business operations can increase production costs or other cost components and can take various forms as a cost risk. For example, changes in regulations can lead to increased taxes or compliance costs, and competition can result in higher advertising expenses.
If a business anticipates these risks, the Board of Directors can prepare strategies to cope with or even prevent these risks entirely.
Helps maintain the reputation of the business
An appropriate risk management strategy helps convey a positive message about the business. Internally, this builds trust among employees in the leadership capabilities of the Board of Directors, thereby boosting employee morale. Additionally, when facing potential risks, the ability of a business to continue serving its customers positively impacts the company's brand. This demonstrates the strength, reliability, and professional work culture of an organization.
4. RSM Vietnam's Risk Management Consulting Services
Our internal audit experts, by understanding business risks and related risks, will assess the company's risk portfolio and develop an appropriate internal audit plan to meet the needs of the Board of Directors. We not only help businesses improve internal control deficiencies but also enhance management effectiveness by identifying improvement opportunities and turning them into business advantages.
With our internal audit consulting service, we will work with the Board of Directors to support the establishment of an internal audit department based on appropriate steps (e.g., identifying the expectations of stakeholders, establishing the structure and regulations of the internal audit department, assessing the company's risk level, developing an internal audit strategy, identifying resources to be used, building internal audit procedures, developing control tools, and evaluating operations).
RSM Vietnam will assist in assessing the necessary skills, providing training content for members of the internal audit department. General or in-depth training content will be developed to ensure that the department meets the personnel requirements.
With our quality review service, RSM will help strengthen the quality of the internal audit department and contribute to improvement through objective and independent assessments to ensure that the department operates in accordance with the required standards and leading market practices.
We will support the assessment of the effectiveness and efficiency of the company's internal audit department by comparing it with internal audit policies, the expectations of stakeholders, and leading market practices.
Our services include:
Conducting internal audit services.
External audit review services.
Quality review of internal audit activities.
Assessment of compliance with corporate governance regulations.
Evaluation of the internal control system.
Providing risk management services.
>>> See more Our Risk Management Consulting Services
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