Business Advisory Blog Business management information from Robert Griffin.

December 8, 2010

Managing Risk – So what should you do?

In my last post “Managing Risk – Who’s doing what?” I gave statistics from both CFO.com and the AICPA as to what companies are doing, or not, about Risk Management and how prevalent formal Enterprise Risk Management (ERM) really is. What the survey says is it’s not prevalent at all at least in the formal sense of ERM. But respondents to surveys from places like CFO.com and the AICPA tend to be companies large enough to support and warrant a CFO and/or an Accounting Manager or the like who are in positions that follow things like CFO.com and the AICAP for reference information and staying current in order to see these types of surveys. I would say hence the term “Enterprise” versus say, Company or Business, or just plain Risk Management.

So if we have an idea what large companies are doing what are small and midsized companies doing relative to managing risk? It’s difficult to say because we don’t have survey specific information to give us an indication, but from those I talk to the responses I get when I bring up the topic of Risk Management to management is we’re already working more hours then ever before, we’re making less money, costs are at the lowest they can be and stay in business and my customers won’t give us any indication as to what they’re business outlook is. Working harder and longer and doing with less is always the first response and that may help your business survive, right now, and management or the owner may feel better because of it, right now, but it leaves a lot not being looked at or at least thought about and that creates a long term risk in and of itself.

My response to management is that they have to periodically back out of the day to day details of running the business and put an action plan together that can be worked on to identify the long and short term risks and opportunitiesl of the business.

Obviously their next question is how do I do that? Where do we start? My answer to that is to do a SWOT Analysis which I find to be very helpful as to the areas to look at and help keep you on track.

We’ll get into the details of a SWOT Analysis next time.

Robert V. Griffin

http://www.griffinadvisoryservices.com

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