To maximize their physical assets, and to ensure they provide the highest ROI, businesses must have a firm understanding of their assets as well as the risks that come with it. Businesses could make poor decisions without an adequate understanding of the risks. This could ultimately affect their bottom line. Lack of a solid asset and risk management process can also leave organizations exposed to costly fines and penalties from regulators or lose profits because of insufficient plan for the unpredictable.
The most prevalent and significant issues affecting asset and risk management include:
Inadequate awareness of what an organization’s assets can do – For example, employees might be unaware that a piece of equipment has the capability to perform a job beyond the scope of its design or to make it operate at its the highest efficiency. This could result in under-utilization of the asset, and a decreased ROI throughout its lifetime. This can be prevented by ensuring employees are properly educated about the capabilities of an asset and how to use them appropriately.
Lack of a robust risk management system – since the financial crisis, a lot of companies have had little time to think about strategic risk. This has resulted in inadequate risk management practices, inaccurate risk assessments and missed opportunities to optimize the company’s assets.
Third-party risk – From cyber security to integrity of data and reputational damage could have huge implications for a business. To mitigate this type threat, a thorough vetting process with failsafe procedures must be implemented to ensure that every vendor has been accepted.