The organizations have been practicing various parts of what called enterprise risk management. The enterprise risk management identifies and prioritizes risk before it occurs. It was considered as the standard management activity across thousands of business organizations across the world. It helps to treat the risk by transfer through financial products, insurance, and also considered as the common practice as the contingency planning and crisis management.
The organizations have a holistic approach to treat different kinds of risk. They are elevating enterprise risk management as a senior management responsibility. Different types of industries have various risks, and each has an approach to risk management. The general practices for enterprise risk management can be done through several driving forces.
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What is Risk Management?
Risk management is a simple practice of reducing risks for the enterprise. It offers a systematic approach to identify and treat a threat to the business. The enterprise cannot avoid the risk only because of limited availability of finance and practical approach. Thus, all types of enterprises have to accept some risk at any level of the business.
When risk management becomes pre-emptive, a consistent business plan was invented to tackle the consequences of real residual risk. The need to have business plan in place. But because there are very few possibilities, even if sufficient time is given. Risk management and BCP are often viewed as rival or over-warping practices. These processes are so tightly tied together that such a split seems artificial. For example, the risk management process constitutes essential input for business consistency plan (asset, impact assessment, cost estimate, etc.). Risk management also proposes appropriate controls for the observed risks. Therefore, risk management covers many areas that are important to the BCP process. However, the BCP process goes beyond a pre-emptive approach to risk management and goes beyond the assumption that disaster will occur at some point.
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How enterprises tackle risks?
Financial risk management is the practice of creating value in money using financial instruments to manage risk exposure. As with general risk management, financial risk management requires a plan to identify risk sources, measure risk, and address them. As a risk management skill, financial risk management focuses on when and how to use financial instruments to make risk expensive.
In the banking sector worldwide, the Basel Accord is adopted by internationally active banks for tracking, reporting, and communicating operational, credit, and market risks. The Bank is currently working for a small regional bank; the same general risk is still apparent. Deposit fraud, including check kiting, insider trading fraud, internet banking concerns, and robbery. With enterprise risk management the Compass Bank must continually seek monitor, reconsideration, or insurance for implementation and improvement.
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