Managing risk is key, says expert
Risk management came under the microscope yesterday as accountants and other business professionals were reminded that no business or sector was immune to risks.
And vice president of international market for Chartered Professional Accountants (CPA) of Canada, Nancy Foran, is urging business operators and Government officials to put the necessary systems in place to help them identify risks and manage them while remaining transparent.
Foran was speaking to Barbados TODAY on the sidelines of a risk analysis and mitigation strategies seminar at the Hilton Barbados, which focused on enterprise risk management.
Pointing out that risk management was critical for any individual, private sector, non-governmental and Government organizations, the accounting official said because risks were often seen as negative, people would avoid doing the activities they deemed risky.
However, she said, sometimes the greatest opportunities came about when one took risks.
“So expanding into a new product line, expanding into a new market, perhaps engaging in an area of business that is new to you, it is all very risky; but if you can look at what makes it inherently risky, and what maybe you can do to prevent some of those negative consequences . . . , then you have what we called residual risk; and that is what you really want to manage,”
Foran, who is based in Canada but has been doing work in the local market over the last eight years, acknowledged that making certain adjustments was not usually easy, but urged business operators to train staff when they have to make adjustments within their organizations to manage or mitigate risks.
“I would always encourage any organization whether it be for profit, or not for profit, Government or what have you, to always make sure it is transparent as possible in its reporting and disclose all of those factors that are required for decision making,” she said, adding that every sector was vulnerable if the risks were ignored.
“Look at the oil and gas industry. Who would have expected that oil [price] was going down so quickly. All of these industries that we thought were very much protected are not. Government is no different,” she warned.
“What happens if you have a global trigger that hits you here in Barbados? It may affect your tourism industry. So I don’t think any industry is ever protected from risk. You always have to be on top of it, and [be able] to identify what things could happen, and how they will impact your business –– however remote and however likely,” added Foran.
During the one-day seminar, participants were made better aware of how to identify risks in their organizations, the likelihood of risks, the impact, and how to reduce the impact or the consequences of those risks.
Executive partner of the management consulting firm Performance Measurement & Management, Brett Knowles, said risks stood to “erode the value in an organization and in government”, and therefore should not be taken lightly.
“So it is important that any organization identify what the risks are and determine how much money and resources it can consume in reducing the risk,” he said.
Knowles said it was also important that operators looked at what had happened in the past and put systems in place should they occur again, pointing out that accountants were “scorekeepers” and therefore had a very important role to play in indentifying and determining if and what resources should be invested in mitigating risks.