Today’s post is by Scott Russon, Social Media Director at TOP CFOS
Welcome to our blog today! TOP CFOS offers the finest CFO services to companies around the world who want to take their organization to the top. We love to be the catalyst behind your firm’s soaring profits as well as being a part of your team! For your convenience, we provide an RSS feed at the bottom of our website so you can subscribe to our Blog. Today’s post comes from the Risk category entitled, “Operational Risk.”
Operational risk is defined by Wikipedia as, “the risk of a change in value caused by the fact that actual losses, incurred for inadequate or failed internal processes, people and systems, or from external events (including legal risk), differ from the expected losses.” Basically there are risks when running a business and it can change the actual loss when compared to your expected loss. This risk is something every company needs to stay on top of. You want to make sure your business is running at 100% capacity.
A big company will see several operational risks. This is when an employee, machine, or supplier fails to accomplish a task for the business. When this happens, it results in a loss to the company. This is why they have boards or teams in big companies to solely focus on just operational risk. It is in the company’s best interest to run efficiently with few errors.
The upper level management in a company is there to foresee these hazards and prepare for them. They can look at past years and adjust systems or procedures that didn’t function well. It’s up to them to prevent risks that could hurt the company. For example, if in past years the preferred shipping carrier failed to deliver shipments on time, then it would be wise to look for a new carrier. But before selecting the next available shipping carrier, they should look at their company reviews before they hire them. Simply changing systems won’t solve the problem unless they find the right solution. Let’s look at some operational risks to watch out for in your business from Wikipedia.
- Internal Fraud
- External Fraud
- Employment Practices and Workplace Safety
- Clients, Products, and Business Practice
- Damage to Physical Assets
- Business Disruption and Systems Failures
- Execution, Delivery, and Process Management
Whether you’re a major firm or a small business, operational risk is something to look for and prevent. It can save your business from many pitfalls. You want to utilize all of the tools, resources, and employees you have to their full potential for the interest of the company. Minimizing operational risks will help your business succeed. If necessary, hire a team to focus on your company’s operational risks or take more time personally to prevent potential hazards in your company.
We hope you’ve enjoyed our Blog today. Please remember, TOP CFOS offers the finest CFO services to companies around the world and would love to be a part of your team. Feel free to reach out to us anytime. Your feedback is most welcome, and we invite you to share this post with friends and associates. Our contact information can easily be found here on our website, so give us a call today! Our next post will come from the Marketing category on our website and is entitled “Hiring a Quality Salesperson.” Thank you for joining us!