Life is unpredictable. Everyone faces challenges and questions that he could not foresee. This makes our life rich and interesting, and doing business - a difficult and risky venture.
The risk to the business is uncertainty of returns, and as a result, the company's slowdown. And if the risks cannot be avoided at all, then it is necessary to learn how to manage them.
Risky Does Not Mean Bold
All the risks that the company carries are divided into several types. The first type is called Strategic Risk. Business plans do not always correspond to the harsh reality. Planning gaps are not always immediately apparent, and often they strike a slow blow throughout the business over time.
Reputational Risk is also a long-term damage for the company. Operational Risk exists in the ways in which companies leverage people, third-party relationships, technology, data, business processes. Financial Risk is related to the company's investments, debts and financing. Unexpected currency value changes or bankruptcy of one of the partners may hurt the business deeply.
To manage those types of risks, the company must find out and understand what might go wrong in an organization. It involves the activities undertaken by a business, which are designed to control and minimize threats to the continuing efficiency, profitability and success of its operations.
How We Manage Risks
The risk management process includes:
● the identification and analysis of risks to which the organization is exposed;
● a measurement of the likelihood of the risks occurring;
● an assessment of potential impacts on the business;
● deciding what action can be taken to eliminate or reduce risk.
Risk reduction could be performed in different ways. The first way is to abandon activity that includes risk. It's called Risk Avoidance. Trying to reduce either the possibility of a loss or the quantum of loss is another way called Loss Control.
Combining business activities also can help to reduce the overall risk. Not only activities of one company, but also different companies can share the risks. It can be called Risk Transfer or Risk Sharing. When the risk is retained when nothing is done to avoid, reduce or transfer it, it is called Risk Retention.
Managing risks takes a lot of effort, time and money, even when the process is perfectly set. This is the reason why scientists and entrepreneurs continue to look for solutions.
In the area of risk management, research is constantly carried out. Scientists discover hidden and specific risks that can affect individual companies and entire industries and industries. Researchers are looking for new ways to plan the business, less costly and more efficient for predicting and reducing costs.
In this they are helped by modeling. Despite the fact that the models are still detached from reality, financial models, supply chain models and others provide an opportunity to objectively assess the work of the company and find its weaknesses.
Using crowds for calculations is a more realistic tactic
A recent study found that the rise of big data and machine learning offers infinitely more fuel to churn out probability forecasts, which can serve as an entry point for businesses looking to harness their data to make better decisions.
“Predictions might be coming from individuals, and they might be coming from models or machines,” says the researcher Grushka-Cockayne. “They might rely on a lot of actual data, or they might be subjective in nature, and it doesn’t matter. The idea is that we want to follow certain principles that we believe are useful.”
Measuring accuracy and tracking performance are crucial to improving forecasts. Its difficult to choose methods to combine forecasts and scoring rules to choose from when measuring accuracy.
Big data analysis and Internet of Things
are a great opportunity to reduce the risks of more accurate prediction and tracking of information. predicting and preparing for risks. And yet so far downside of the IoT is the increased risk to data security as more sensitive data is being created and stored on network.
A good way to use technologies
without a threat to security is to introduce blockchain-based tools to an existing model.
Business Insurance quotes words by Rocco F. Mancini, consultant, captive solutions at Marsh USA Inc. in Norwalk, Connecticut: “Blockchain, which is a distributed ledger technology, allows multiple users to securely share contract information and bind parties to agreed wordings that are automatically documented and validated.”
Richard Magrann-Wells, executive vice president at Financial Institutions Group, Willis Towers Watson, notes the following benefits of a distributed ledger:
● Transparency: activity can be monitored in real time by all market participants;
● Faster settlement: by removing third parties, settlement is virtually instantaneous;
● Cost reduction: removing the need for intermediaries results in lower costs;
● Reduced fraud: with a permanent, immutable record of every transaction, fraud becomes more difficult;
● Resilience: when your data is replicated and synchronized amongst all market participants it creates the most resilient, decentralized database possible.
FCE BLOCKCHAIN Brings Solutions
and traceability of both internal and external work of an enterprise are key concepts for Industry 4.0
. A large amount of constantly incoming data is automatically processed, and this allows companies to significantly save costs on resources, including risk management.
FCE BLOCKCHAIN provides technical capabilities for collecting and analyzing information. A set of software tools is well applicable to different businesses. It can be flexibly configured and set the necessary parameters.
With impressive mass statistics regarding your company and your partners, you can more accurately predict risks and be prepared for them.