Why is Risk Management so important?
Risk management is a concept that is on everyone's radar to some extent. We've all heard of risk management, and it plays a very important part in everything from individual roles to high level governance strategies, across small to multinational organisations. But why is it so important, and how can we make it work for us?
At the most basic level, risk management is about navigating the path between progress and profit, and the rules and regulations that potentially challenge or restrict potential profit. In practice, this means the process of identifying potential risks, then assessing and prioritising those risks based on their potential impact and probability.
The links between compliance and risk management are perhaps not immediately obvious, but they are inherently interlinked. Following the 2008 financial crisis, the Financial Services Act 2012 set out the framework that would lead to a tougher regime designed to prevent mis-selling and the risky culture that was felt to have contributed to the crash. The Financial Conduct Authority now oversees the sector, and effective risk management is a theme that runs throughout the FCA Handbook; Principle 3 states that firms should have 'adequate risk management systems'.
Non-compliance itself, therefore, is a risk, and can have devastating consequences for an organisation, ranging from loss of profit or fines to damage to reputation. But having a robust compliance framework in place is not the same as having a developed risk management system. A good risk management strategy needs to be underpinned by individuals and, where relevant, teams, with specialist knowledge. Internal auditors and quality assurance officers, compliance specialists and other risk and control professionals should form part of a coordinated approach.
While many organisations will have that coordinated approach in place, this needs to be supported by a robust practical application of the regulations and best practice. Too often, this is attempted solely through the existing policies and procedures, and a variety of divergent provisions such as standalone excel spreadsheets, meaning that it is difficult to be able to provide a good audit trail when required by the regulator. With advances in technology, though, this no longer has to be the case. Such systems allow companies of all sizes to maintain efficiency through automisation, where possible.
Having a single, consolidated system that both supports best practice, and enables an organisation to collate documentation and evidence needed to accurately audit and report, in line with regulatory requirements, makes good business sense. Having a preventative risk management system not only allows for a greater insight, control and support, but also takes the hassle out of reporting.
Designed specifically for risk management, Dynamatix Limited's Conduct Map offers a complete Risk Management solution. Using a holistic approach to compliance, it allows organisations to create controls, monitor those controls, report and manage controls, incidents, risks and complaints. The Conduct Map system supports both the FCA authorisation and supervision process. It offers a tailored and flexible solution for firms to manage risk in a robust and accurate way.
In partnership with Dynamatix Ltd, RB Compliance Consultancy offers a robust installation and set up service, providing consultancy to review current risks, incidents, complaints and documents, advising on appropriateness and agreeing a process which works for your company. The system will then tell the end users exactly what they need to do and when, keeping everything simple. Furthermore, every month or quarterly, RBCCL will review each log to make sure that users are acting correctly, and processes are running as they should, and that this can be evidenced to clients and regulators.
You get the peace of mind of knowing that risks will be actively and accurately measured and reportable, alongside overall support from both Dynamatix and RB Compliance Consultancy. The system is easily utilised to catalyse business culture changes, in line with the FCA's requirements that customers are at the heart of how a business is run. With the FCA now examining a business’s ‘tone from the top’, it makes great sense to use a system that will easily allow you to identify, implement, and demonstrate any required changes to stay ahead of compliance with the regulator.
If your organisation needs to have adequate operational systems in place to record, control and report on the results of risk assessments, this system, along with RB Compliance's set up and support service, forms an excellent risk management system. Removing the need to rely on disparate internal systems, which simply do not provide the required level of compliance and oversight for today's regulatory landscape, enquire with us today for a demonstration and cost breakdown.