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How Useful Are Risk Management Consultants?

By Jack Wogan

Going head first into a business is not the wisest thing to do. The risks that large companies are facing into today`s globalized world are huge as the recent financial crisis has made clear. “Risk management” was probably the most uttered phrase since the collapse of the sub-prime market and the debacle that followed.

How is it possible for a multinational to consider the myriad of risks it encounters every day? And do so in a correct, unbiased manner that will inspire confidence in both shareholders and investors? Big business are without a doubt about big money and this can sometimes shadow some people`s clear thinking. And when these people are also in charge with risk assessment the consequences can be dire. Striking the right balance between risks and making more money has always been a tricky business.

To be honest, corporations have improved their risk assessment mechanisms; their ways to analyze and predict future risks have kept up with economic developments. But the mere fact that they bettered their techniques makes them prone to complacency and
vulnerable to other risks. This is exactly what happened when the tongue-twisting volcano in Iceland erupted weeks ago and brought the whole air traffic in Europe to a halt. The event showed that few companies had enough capacity built in to deal with unexpected natural events. Deeming them improbable, they attached relatively low costs to them. But the sense of security that this practice gave to companies proved to be false and dangerous.

Another temptation in risk management is to consider only routine and local risks, put them on a list, and assess their negative impact based on past experiences. Thus risks such as health and safety issues, environment hazards or less controllable like changes in exchange rates or political environment, become all of the sudden predictable. Or so they think because the recent ash cloud that disrupted the entire European air traffic proved otherwise. Consequently corporations fail to create the capacity to deal with less likely but catastrophic events.

This is where external risk management consultants come into play. They are professional, well-trained experts who have the know-how of identifying, assessing, and formulating strategies that help the company deal with the negative impact of an event when it occurs. They come from outside the company itself without being outsider to the business proper. This guarantees their integrity and protects them to some extent from executive pressure.

Safety2Business is a leading provider of risk management consultants for effective Health & Safety and Risk Management solutions.

Article kindly provided by UberArticles.com

Topics: Management | Comments Off

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Article Citation
MLA Style Citation:
Wogan, Jack "How Useful Are Risk Management Consultants?." How Useful Are Risk Management Consultants?. 6 Jul. 2010. uberarticles.com. 4 Aug 2014 <http://uberarticles.com/business/management/how-useful-are-risk-management-consultants/>.

APA Style Citation:
Wogan, J (2010, July 6). How Useful Are Risk Management Consultants?. Retrieved August 4, 2014, from http://uberarticles.com/business/management/how-useful-are-risk-management-consultants/

Chicago Style Citation:
Wogan, Jack "How Useful Are Risk Management Consultants?" uberarticles.com. http://uberarticles.com/business/management/how-useful-are-risk-management-consultants/


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