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Risk Management and Its Importance
October 20, 2018
Ece Sancak
Risk Management and Its Importance

Wha tis Risk?

Riskis events that affect the achievement of a company's goals outside expectations and lead to positive or negative results. In this context, we can state thatthe risk includes both the current structure of the company and the development of future growth opportunities.

Risk Management aims not only to avoid negativity but also to achieve something positive. In other words, in addition to defending against adversities, being ready for opportunities can be provided with risk management. Risk for business is not only about bankruptcies; Due to hackers, security risks, pollution of the environment andrisks to public health can be affected by different dimensions. One of the most important consequences of these risks is the loss of corporate reputation. Due to this and similar possible results, many institutional investors today demand strong risk management practices.

Regulatory activities also ensure that the risk remains on the agenda. Many regulatory bodies (in the United States; Sec- Securities and Exchange Commission, the PCAOB - Public Company Accounting Oversight Board, and the NYSE - New York Stock Exchange, in Japan, the FSA - Financial Services Agency and in Turkey, SPK - Capital Markets Authority , BDDK - Banking Regulation and Supervision Agency, stipulates and encourages studies on risk management.

As a result; sustainability of companies, sustainable growth, regular income model, reducing the costs of losses, prevention of surprises, social responsibility and compliance with legal regulations reveal the need for risk management in companies. For these reasons, the boards of directors, which are the strategic decision-making bodies of the companies, have important roles and responsibilities in the management and supervision of the company risk.

Definition of Corporate Risk Management

Although it is used frequently in the business world in our country, there is no standard definition regarding “Corporate Risk Management’’

According to the definition provided in theCorporate Risk Management Guidelines prepared by the TÜSİAD Risk ManagementWorking Group, Corporate Risk Management; It has been established to identify potential events that may affect the company, manage risks in accordance with the corporate risk taking profile of the company and provide a reasonable degree of assurance regarding the achievement of the company's objectives; It is a systematic process applied throughout the organization, used by the company's board of directors, senior management and all other employees, and used in determining strategies. The main benefits of Enterprise Risk Management for a company are;

·      Ensuring sustainable profitability and growth,

·      Minimizing income fluctuations,

·      To make risk decisions more healthy and to be prepared for surprises,

·      Consistency of strategies and taken risks, better identification of opportunities and threats,

·      Increasing competitiveness,

·      Effective use of resources,

·      Compliance with laws and regulations,

·      Protection of reputation and trust,

·      Establishing corporate governance quality,

·      Increasing the Company value.

Cooperating with the right consultant team in order to establish a Risk Management Process that will take the necessary actions quickly, if necessary, by identifying the potential risks for your long-term stability and success, both in terms of commercial and reputation, will necessarily return to you as a gain in both today and in the future.

October 20, 2018
Ece Sancak