Preparing for a global risk assessment
ARTICLE | January 31, 2024
Authored by RSM US LLP
In the dynamic and increasingly unpredictable landscape of international business, numerous challenges could severely affect a company’s operations and cause significant financial damages—these include economic volatility, regulatory changes, natural disasters, global health crises and cyberattacks, just to name a few. A global risk assessment has become an essential tool for any global corporation to ensure business continuity and minimize risk exposure.
While it’s difficult for a business to be completely prepared for some of these potentially seismic scenarios, a global risk assessment can go a long way to keep your business from being caught off guard.
- Pre-assessment preparation: Determine key internal and external stakeholders, assemble cross-functional teams, define risk assessment goals and methods.
- Risk mapping: Identify internal risks across all departments and operating regions, including risks from suppliers, vendors, regulatory agencies, etc.
- Risk assessment: Rank all potential risks by likelihood of them happening, potential economic damage to the company and impact on brand reputation.
- Mitigation plan: Develop specific measures to prevent and mitigate different risks; allocate both technology and human resources for different mitigation plans.
- Contingency plan: Appoint a dedicated team for certain critical situations, define clear reporting channels and establish decision-making protocols. Develop a business continuity and crisis management plan, including setting up facilities or devices for data backup to ensure minimal business shut down.
- Investigation protocol: Establish the team (including internal and external resources) needed to conduct an investigation to answer the key questions about the risk that materialized, including documenting mitigation steps for when an issue is identified.
- Scenario simulation: Conduct simulated risk scenarios to evaluate the readiness of mitigation and contingency plans.
- Monitoring and improvement: Periodically review the risk assessment process, mitigation plans and contingency plans. Continuously update and improve them as changes occur internally or externally.
- Artificial intelligence (AI) data analytics tools: Data analytics tools that incorporate AI can allow your company to collect, process and analyze data in real time. Thus, data from various resources can be captured altogether to provide early warnings of potential risks. For example, AI tools developed to detect fraud risks have proven to identify potential improper transactions that traditional tools failed to detect, catching bad actors sooner and minimizing the financial impact to organizations.
- Cybersecurity tools: Global businesses face cyberthreats from both domestic and offshore bad actors. Cybersecurity tools are vital in preventing unauthorized access, data breaches, information leaks, malware attacks and other cyberthreats that can lead to financial losses or even legal consequences.
- Supply chain monitoring tools: Companies operating across borders often depend on complex global supply chain systems. Effective supply chain monitoring tools can allow your company to track the movement of goods, forecast demands and manage inventory. With more advanced set ups, ensuring international trade compliance and ethical sourcing can also be achieved.
- Testing and validation: To provide a sense of credibility to stakeholders, investors, creditors and regulators, a trusted advisor can independently test the effectiveness of your company’s existing internal controls or enterprise risk management system. For example, RSM can develop a testing program that provides benchmarking while also demonstrating your company’s commitment to strong risk management.
- Mitigation plan development: By drawing from experience in handling similar risks from other companies in the same industry, a trusted advisor can bring a more comprehensive view to how to mitigate and react to certain risks. With this deep perspective, we can develop a customized mitigation plan that embraces your company’s business goals and core values.
- Technology tools implementation: Data analytics, AI, cybersecurity, supply chain optimization—there are so many options for technology and digital tools in today’s business world. Which tools are the most cost-effective? Which tools satisfy your need as a multinational business? Which tools best meet the needs of your industry? Leverage RSM to provide insight for selecting and implementing tools and technologies, including migrating to fit your existing digital infrastructure.
- Dispute and litigation support: In case of a business dispute, regulator inquiry or government investigation, a trusted advisor provides the in-depth understanding of complex financial, technical and industry-specific matters that are crucial in dispute situations. Through comprehensive research, data analysis and expert testimony, we can facilitate negotiations, strengthen legal arguments and assist the legal team to achieve favorable outcomes.
- Loss determination and insurance claim support: Not all risks can be prevented. A trusted advisor can work with you to quantify business losses accurately and defensibly. Only an advisor with deep industry knowledge and experience in insurance claim calculations, can help you achieve the optimal insurance claim resolution and accelerate the business recovery process.
Putting a plan in place
Amid a growing spectrum of business threats, a global risk assessment is a critical tool to address risks and establish continuity and sustainability. While no organization can completely insulate itself against all risks, an assessment can prepare your business for a wide range of risks and lessen the potential of harmful financial and reputational damages and interruptions in operations. Preparation for the global risk assessment itself is a critical initial step in the process, ensuring that your key stakeholders are incorporated and your critical interests are taken into account.
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This article was written by RSM US LLP and originally appeared on 2024-01-31.
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