In the context of the market economy, businesses are constantly innovating in business management and operation activities. The consequences will be very serious when the supply is greater than the demand, modern innovation policies are constantly applied, in addition to inefficient business, fierce competition from other competitors can be faced. with many risks of serious consequences. Enterprises gradually come to a standstill leading to dissolution or being declared bankrupt.

Many studies have shown that people tend to overestimate their ability to influence events that appear randomly. We are often overconfident in our projections and risk assessments while weighing the possible outcomes. In addition, most business leaders let themselves be “bound” by fixed numbers, despite knowing the risk of warning from the outside. When consulting with stakeholders, businesses often tend to receive information superficially, discarding warning information. Until the direction of things goes differently than expected, there is a tendency to “fight fire” despite the consequences that have and will happen.

From that situation, it shows that businesses in general and commercial enterprises in particular need to have tools to arrange and evaluate to make decisions about risks as well as related costs to prevent or remedy the consequences. consequences when the risk occurs. To do that, businesses need to build a risk management model.

In the world, risk management has existed for a long time and is increasingly being evaluated as a very important principle in business operation and management. Currently, there are more than 80 standards and guidelines for enterprise risk management, including COSO 2004, ISO 31000: 2009, FERMA 2002 which is one of the most popular standards and guidelines.

1. What is enterprise risk management?

Risk management is understood as a process of continuous improvement using technical measures, tools, strategies, policies, etc. to identify, evaluate and minimize all risks that may be related. to business operations, especially assets. The position of director, financial expert, human resource advisor, legal officer, risk control specialist in an enterprise is assigned the task of implementing risk management for the enterprise itself. But there are also a number of businesses that have used risk control services from financial corporations, law firms, etc. That has helped businesses make accurate and effective decisions, saving time, minimize damage in the process of operating, managing and doing business.

2. Risk management principles

2.1. Risk prediction

Enterprises need to make quarterly and annual plans: The current situation of the company, the likely future scenarios to have the most effective response plan.

Risks can also represent opportunities, so if a business is able to predict risks, it means there are more opportunities to ensure the competitiveness of the business.

2.2. Determine the order of precedence

When predicting as well as the occurrence of risks in reality. Enterprises need to evaluate and determine the order of priority to deal with risks from high to low, prioritizing solutions that are vital to the business.

2.3. Establish the role of personnel in risk management activities

Establishing roles and responsibilities in line with the ability of each member in the risk management process of the enterprise is a very important factor not only to ensure effective risk management, but also to help the business firmly succeed. labour.

Human resources will contribute to propagating the risk management strategy to other personnel so that everyone in the company knows the urgency of the problem as well as identifies their tasks in that strategy.

So how to effectively manage risk at the enterprise?

3. Effective risk management process

Along with building a business strategy, businesses need to determine the level and limit of risk handling. When an enterprise detects events that may affect the implementation of its strategic goals and business activities such as: events leading to operational stagnation, loss of important assets, deletion in the distribution system, mistakes in system administration, internal decentralization, project implementation costs exceeding estimates, increasingly outdated technology, ….It is a strategic risk, a risk. operational risk, financial risk and compliance risk.

Risk identification is very important because it will help businesses focus and effectively solve existing problems. Enterprises will assess risk by determining their level of risk and assessing their highest rated risks and devise a plan to treat or modify these risks to achieve an acceptable level of risk. Okay. Risk mitigation strategies, hedging plans and contingency plans can reduce the probability of negative risks as well as enhance opportunities for the business.

4. Conclusion

Risk management in business is not easy. In order for businesses to be proactive and cost-effective, businesses need to map out many possibilities and think about them systematically so that they can come up with a strategy suitable for each type. business development more and more sustainable.

With a team of consultants with more than 15 years of experience in the field of consulting and corporate governance, Khoa Tin is proud to have helped advise many large and small enterprises in effective corporate governance, especially in legal field  from recognizing the difficulties and obstacles in the business and offering effective solutions to solve many outstanding problems, accompanying the risk management with the enterprise in the long run.

In case customers have unclear problems or need to discuss further, please call us immediately at 0983.533.005 for a free consultation.

Best regards./.