Business Risk Management: Why Life’s Biggest Risk Goes Unnoticed

Just like life throws challenges at us every now and then, businesses also ride the same currents. Risk is not just a possibility, it is an ever-present reality that shapes decisions, drives innovation and tests resilience. The difference between thriving and crumbling down of a business often comes down to one aspect – how well you manage risk. And yet, as businesses scramble to protect their material assets, a far more profound and irreplaceable wealth goes unnoticed not just by businesses, but by every human being. This article isn’t just about understanding risk management. We will also explore the parallels between business risk management and life’s ultimate risk that is yet undiscovered.

Business Risk Management Highlights 

• The business risk management market size, globally, is projected to rise to USD 35.9 billion by 2032. (Source: The IMARC Group)

• The World Economic Forum’s Global Risks Perception Survey (GRPS) reveals noteworthy insights about the nature of the constantly evolving factors that pose a risk to businesses. The survey states about 66% of the respondents labeling extreme weather as their top risk that would lead to a material crisis globally in 2024. AI-generated misinformation ranked 2nd at 53%, followed by societal and political polarisation. 

• 60% of the respondents of International Sos’s survey feel political misinformation can be a serious risk, affecting employees as well as operations.

• 49% of businesses are widening their cybersecurity and privacy investments. (Source: PwC Pulse Survey)

• Adding to the seriousness of Cybersecurity as a top risk, Protiviti revealed that 9 out of 10 executives identified cyber threats as a long term risk.

• The gigantic budgets set aside for business risk management indicate how seriously we take our losses. What if we are unknowingly incurring the greatest loss of our human lives, despite such strenuous preparation?

What Is Business Risk Management?

To run a business without a risk management strategy is to walk a tightrope with no safety net. The business world is unforgiving and without a proactive approach to managing risks, disaster is only a matter of time. But risk management isn’t about avoiding risk entirely. That’s impossible. Therefore, Business Risk Management is strategising how to deal with the risks associated with a business. It involves anticipating, preparing for and strategically confronting those risks to come out on top. It is also known as Enterprise-wide Risk Management or ERM.

Why Is Business Risk Management Needed?

• Risks are inevitable and effective risk management strategies can help businesses survive the storm in most cases. 

• It helps organisations identify potential problems that could arise, helping them plan a solution for them beforehand.

• It also reduces the chances of any negative impacts on the business. 

• Additionally, it ensures a relatively safer workplace.

• By proactively identifying the risk zones of business, it helps teams stay vigilant and flexible at the same time.

• Notably, the 2023 State of Risk Oversight Report reveals that since 2021, the ‘volume and complexities of risks’ has gone up. It has crossed 60% steadily and with the level of the risk volume and complexities being described as ‘extensively’, as opposed to the previous ‘mostly’.

Source: The 2023 State of Risk Oversight Report

• The graph above concludes that the perception of risks has reached an all-time-high since the past 14 years due to ‘continued uncertainties’ in the global scenario across various challenges.

Enhancing Business Risk Management Through Human-Centred Insights 

• At the heart of every risk management strategy are the stakeholders, such as employees, leaders, customers, suppliers, investors, financers, insurers, local government agencies, local communities, etc.

• One can have all the systems in the world, but without the right people, the risk management plan will fall apart.

• Taking feedback from these stakeholders can help an organisation develop a robust business risk management plan. It collates different views along with areas of expertise. 

• Employees also need to be on board with the company’s risk strategies, such that they are fully trained and vigilant against threats. 

• Business leaders, on the other hand, must foster a culture of accountability, where risks are openly discussed and not swept under the rug. 

• Despite the enormous efforts to build a robust business risk management plan, as per the 2023 State of Risk Oversight Report, less than half of their survey sample (48%) could correctly define the meaning of ‘risk’.

■ Also Read: Mastering Sales Strategies: 15 Effective Sales Techniques You Need to Know

Methodology Of Business Risk Management

Broadly, it is classified in the following steps:

1) Identification

We cannot tackle a problem we cannot see. Similarly, businesses must identify every potential threat, both within and outside their operations. 

• This requires relentless scrutiny of everything, from market conditions and emerging technologies to internal weaknesses that could be exploited.

• Organisations also need to review past events and risks, current trends in various fields, any social issues affecting the business, etc. 

• Often tools like survey reports, customer feedback and complaints also bring a fresh and broader perspective. 

• Doing a SWOT (Strength, Weaknesses, Opportunities, Threats) analysis of your business reveals crucial data.

• When the sample group of the 2023 State of Risk Oversight Report was asked to what extent does their company identify the given categories as risk categories. The results reveal that a ‘dominant focus lies on risks related to information technology systems, legal regulatory/compliance and finance related risks’.

Source: The 2023 State of Risk Oversight Report

2) Assessment and Analysis

Once risks are identified, the next step is to analyse them diligently. 

• Businesses must evaluate the likelihood of these risks and the potential damage they could cause. 

• In order to analyse risks, one must first check on the likelihood of a risk happening and its consequences if it did happen.

• The high-impact and high-likelihood threats are the ticking time bombs that demand immediate attention. Failure to assess these correctly means flying blind into disaster.

• Based on the scale of the business, some of them also have dedicated specialised risk management teams that solely focus on risk assessment, risk profiles, strategic risks, risk preparation and risk treatment. 

• There are several ways to assess risks and the methods also vary based on the industry. 

3) Mitigation

After identifying and assessing risks, the next step is to deploy strategies to reduce the chance of those risks becoming a reality. 

• A detailed plan of action has to be developed based on the assessment of the risk and the type of risk.

• For example, if the business is in the IT sector and the risk is a cybersecurity attack, the efforts would be then in protection against any possible cyberattack. The company may resort to their plan of action like strictly restricting access controls, deploying advanced security firewalls, etc.

• Whether it’s strengthening cybersecurity defences, diversifying suppliers or investing in insurance, mitigation is the safeguard that turns potential catastrophe into a more manageable challenge.

4) Monitoring and Review

Risk is not static, it keeps evolving. What seemed like a manageable risk yesterday might spiral into a full-blown crisis today. 

• Businesses need to continuously monitor risks, reviewing their mitigation strategies and adapting to new threats. 

• The business risk management plan has to be reviewed time and again to check its effectiveness in the current times.

• Similarly, risks also need to be constantly reviewed to understand their relevance and increasing danger.

The world changes rapidly and risk management has to keep pace or it becomes irrelevant.

5) Response Planning: 

Some risks materialise no matter how well-prepared you are. That’s why every business needs a well-researched response plan. 

• A response plan is developed after the rigorous processes of identifying, assessing and analysing the damage potential of a risk.

• Different types of risks will have different plans. They provide a fixed path of action once a risk has materialised, helping businesses react swiftly and smartly, minimising damage and panic.

• IBM’s Cost of a Data Breach Report 2022 states that 73% of their survey sample size had an IR plan (Incident Response plan) in place, whereas 63% of these confirmed to regularly testing the risk plan.

Source: IBM’s Cost of a Data Breach Report 2022

• The survey also reveals that the organisations who had a focused IR team that tested their IR plan regularly, saved USD 2.66 million in terms of breach costs as opposed to those who hadn’t tested their IR plans. It helped them gain 58% cost savings. 

Types of Business Risks

There are several categories of risks. They also depend on the type of industry and size of the business. 

Broadly, we will address a few categories:

• Financial Risk: These include stock market fluctuations, ill-advised investments, shifts in cash flow, loss of clients, economic changes locally and globally, to name a few.

• Operational Risk: These are disruptions that impact the operations of a business. They also include natural disasters, theft, any infrastructural damage, etc. The COVID-19 pandemic is an example of a completely unforeseen risk that disrupted supply chains significantly.

• Compliance Risk: Businesses operate in a web of rules and regulations. Failure of a business to meet government regulations, compliance protocols can lead to ruinous fines or sanctions. Non-compliance can also tarnish the reputation of a business. In an era of increasing regulatory scrutiny, compliance risk is one of the deadliest threats a company can face.

• Strategic Risk: Some businesses die slowly, suffocated by poor strategic decisions. Deviating from business strategies like entering the wrong market, shift in consumer demands, legal changes or laying stakes on a product nobody wants can lead to losses. It’s the slow-burn risk that many companies don’t realise until it’s too late.

• Reputational Risk: In the age of social media, the reputation of a business can be obliterated in seconds. One public relations blunder or unethical decision, and the digital mob spares none. This can be very damaging to a brand and costing customers in droves.

• Global Risk: Global conflicts and instability have risen to be important factors affecting the trade negatively. For example, the ongoing Ukraine-Russia war and very recently-erupted Israel-Iran conflict.

• Bad Debt Risk: These typically arise when a company goes into bankruptcy and fails to pay bills or service their debt.

• Competitive Risk: A competitor selling the same products at a lower price is an example of how this risk can result in a negative outcome for a business due to a competitor’s actions.

• Cybersecurity Risk: Cybersecurity is not just among the top 5 risks in every single international survey, but has also dramatically risen to the number one spot. Cybersecurity attacks can result in massive losses in this digital age, such as loss of critical data, financial frauds, loss of digital assets, to name a few.

Source: PwC Pulse Survey, 2022

Contradictory opinions

Our journey through this article so far, reveals the staggering amount of effort that businesses put into identifying, assorting and making plans for averting or minimising losses due to risks.

• What is critical to note here is that despite the enormous effort and funding in business risk management, its effectiveness does not echo with the key stakeholders – the employees. 

• The statistics below demonstrates that only about 11% collectively believe that their organisation’s risk management process has given them a competitive advantage. On the other hand, an overwhelming 89% aren’t impressed with the business risk management process.

Source: The 2023 State of Risk Oversight Report

• Despite the rigorous planning, magnanimous budgets and overwhelming efforts put into business risk management, one must ask – has the purpose truly been achieved?

• Risks continue to grow and morph, and so do losses despite cutting-edge technology. Does the term ‘risk management’ even live up to its name?

• In our relentless pursuit to prevent financial loss, we’ve become short-sighted, fixating only on external material threats. Survey after survey reinforces the severity of this troubling reality.

But have you ever considered the greater, more profound loss you endure daily – one that no risk management strategy can ever mitigate?

Managing The Risk Of Losing The True Capital Of Life

Jagatguru Tatvdarshi Sant Rampal Ji Maharaj enlightens us about the vast and unrivalled wealth every human is born with, and if not ‘managed’ well, leads to unfathomable loss.

When a soul takes human birth, it is endowed the wealth of a finite number of breaths, akin to the capital in a business. Just as a business cannot survive once its capital is depleted, human life ceases once this precious ‘capital’ of breaths is exhausted.

Sant Rampal Ji Maharaj reveals that these breaths are entrusted to us for one ultimate purpose – to attain salvation. If we fail to achieve this, the soul faces Yamaraj, the god of death, who asks, ‘Where is the material wealth you accumulated? Did you bring any of it with you?’ The soul, blinded by material pursuits, has no answer and hangs his head down in shame, having forgotten the true purpose of human existence.

He (Sant Rampal Ji) further discloses that this rare and precious human life is granted to us solely to seek salvation. Only through the authentic worship of Supreme God Kabir, under the guidance of His chosen Complete Saint, can salvation be attained.

In today’s world, Sant Rampal Ji Maharaj is the singular Complete Saint (True Guru) and the undisputed chosen messenger of God Kabir. To learn how you can wisely invest your real wealth in this human birth, visit:

• Website: www.jagatgururampalji.org
• YouTube: Sant Rampal Ji Maharaj
• Facebook: Spiritual Leader Saint Rampal Ji
• Twitter: @SaintRampalJiM

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