Need Of Risk Managers in Startups
Free Book Preview Entrepreneur Kids: Launch Your Own Business
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
In this age of new business models, globalization and rapid growth in businesses across the globe and effective risk management has become a critical factor for the success of businesses.
Business, needs to steadily analyze and respond to challenges like market volatility, geopolitical crises, widespread economic changes, regulatory reforms, and generally ignored cyber threats, which have become more and more frequent. To manage these risks effectively, there is a huge demand for skilled Risk Managers, who can navigate the organizations through all these risk and help them achieve their business goals.
Early recognition and mitigation of risk is a critical factor for success in all types of businesses, even more for startups, as the cushion for absorbing failure is relatively low. Some of the examples of ineffective risk management leading to failure are – incorrect market understanding, operational challenges like – managing product quality, alignment to customer need, managing team members, incorrect expansion plans etc.
Risk is omnipresent, and needs to be managed in all business processes like finance, procurement, sales and marketing, manufacturing, logistics etc. that work together to make an organization.
An example of how risk recognition will help in making a business successful is when e-retail start up selling branded clothes, competing with other sellers of the same whether on-line or normal retail will have to understand market dynamics of pricing, product selection, quality, availability, vendor development, customer preferences, changing fashions, non-stocking benefits etc.
To ensure proper positioning and ongoing success, the startup will have to understand all the above, manage the risk of buying the right product from the right vendor at the right price, continuously upgrade his understanding of customer preferences to ensure availability of the right choice of product with the times in order to win customers.
This is where a Risk Manager will design your risk-mitigating framework in a way that encompasses all activities that can effect the marketability of the product to ensure success for the venture.
Risk Manager Can Build A Successful Startup
Risk Management encompasses multiple activities that a risk manager has to perform , to ensure maximization of business value.
Risk Management cuts across the organization and is required across processes. The Risk Manager manages all type of risks like strategic, operational, compliance, regulatory and financial risk for an organization / client.
>> In depth knowledge of business value chain: ability to understand and identify improvement opportunities to drive efficiencies across business processes
>>Enterprise Risk Management: understand and analyze risk, velocity of risk etc. at an enterprise level
>>Analyze and interpret Big Data: ability to analyze data across business value chains like procurement, manufacturing, finance etc. All these analysis are used as critical inputs by management for taking key strategic decisions.
>>Managing Cyber Risk: ability to design controls to avoid cyber attack in the day and age of rapidly growing online businesses.
>>Managing Technology risk: to ensure confidentiality and integrity of critical business information.
>>Regulatory and Compliance Risk: with rapid growth and multi-geography operations, ensuring compliance with regulatory requirements across locations. ROLES OF A RISK MANAGER
>>Developing Risk Library of all risks, an organization is exposed to – strategic, operational, regulatory, compliance and financial.
>>Designing robust control frameworks to avoid business breakdowns, pilferage, inefficiencies etc.
>>Supporting management in taking risk-intelligent decisions to ensure business value maximization.
>>Conduct periodic reviews to ensure all processes reworking as desired.
This article first appeared in the Indian edition of Entrepreneur magazine (July 2016 Issue).