Corporate Risk Management is the essence of bigger organisation in long run. If the business is able to manage it’s financial and operating risk in the effective manner it mean that it made it. CRM is a institutionalize approach which begins from laying down the process from identification of the risk to its mitigation.
Many of the bigger organisations have CRM as a separate department and the employee working under the department are basically the risk mitigation enabler. Companies that succeed in creating an effective CRM have a long-run competitive advantage over those that manage and monitor risks individually.
CRM many a times act centrally to the other entire department. For capturing the better picture look at the below chart.
Implementation of CRM governed by following key points-
a) Inventory Risk- It involves identifying the risk to which the company is exposed. Risk may include both financial as well as operational. Now a days many biggies are working on assessing the strategic risk which is altogether a new and different piece of assessment.
b) Risk Categorization- Prioritizing the risk on the basis of its zone likewise High, Low, and Moderate. Formulation of Risk register may very well deal with it.
c) Risk Mitigation- The ultimate purpose of risk identification and categorization is to prepare for risk mitigation. Risk can’t be avoided but it can be mitigated to reduce its effect in cases if it occurs. It may include alternative course of action which can be stress tested to check its usefulness.
d) Risk Monitoring – Mitigation doesn’t ends up the CRM process. It is continuous process. The purpose of risk monitoring is to determine-
a) Risk mitigation plan has been implemented.
b) Risk response actions are as effective as expected, or if new responses should be developed.
c) Keep track of the identified risks.
I have tried to sum up the thing in precise manner otherwise the topic is much wider and there are no. of books, articles capturing the topic in a beautiful manner. CRM is a newly addressed subject which still requires a lot of research work. Hope you will like it!
Article by –
Anubhav Jain (CA Final),
Kota (Rajasthan),
Email- anubhav5jain@gmail.com
Author Bio
Nice Article.