By Lisa Blankman, CPA
Senior Manager, Audit & Assurance Services
At the beginning of the year, the global consulting firm Protiviti projected 2023 to be the riskiest year in the 11 years it has conducted its annual risk analysis survey. Top risk factors included talent acquisition and retention, increased labor costs, resistance to pandemic related changes (remote working, virtual meetings, etc.) and increased training time.
A prudent business leader proactively plans for managing risks like these. “Managing” is the key word, as leaders ideally need to stay ahead of those risks rather than waiting to recover from them.
The pandemic opened our eyes to risks that we could never imagine and ways of adapting that we never thought possible.
What did we learn?
The importance of critical analysis of the possible broad range of risks that may impact your business is imperative. A business operator must be proactive in assessing the likelihood of those risks occurring and then determine the best way to minimize and mitigate any possible damage to the enterprise. The cost v. benefit balancing act will be a part of that conclusion.
This should be more than just an informal annual discussion with your insurance agent. Writing a formal analysis and working with a professional risk manager may help you determine all the types of risks that you are exposed to — some may be able to be subject to insurance coverages, but many may not. But they represent true risks to the business that would have an impact on operations.
Knowing the breadth and depth of your exposure to risk is beneficial in mitigating risk and planning in the future. Risk management planning is something you should do on a regular, annual basis, specifically analyzing risk factors in all areas, including:
- Cyber Security
- Government Regulation
The key to managing risk is to be vigilant and expect the worst. Be prepared and aware!
Some of the takeaways of the pandemic experiences and the recent banking scare are proof that the unexpected and unthought of may occur. Will you and your enterprise be ready?