While producing any product, manufacturers ๐ฅ๐ถ๐๐ธ ๐๐ฑ๐๐ถ๐๐ผ๐ฟ๐ ๐ฆ๐ฒ๐ฟ๐๐ถ๐ฐ๐ฒ๐ commonly encounter a range of technical, cultural, moral, and ethical risks. Risk Advisory Services play a crucial role in pinpointing these risks, and detecting process gaps and mismanagement. This ensures adequate controls are implemented to mitigate risks, either through redefining processes or establishing systematic procedures. ๐๐๐ฑ๐ถ๐ ๐ฆ๐ฒ๐ฟ๐๐ถ๐ฐ๐ฒ๐ empower companies to engage in business with confidence, as they efficiently measure and manage these risks, enhancing overall risk management effectiveness.
๐ช๐ต๐ฎ๐ ๐ฎ๐ฟ๐ฒ ๐๐ต๐ฒ ๐๐๐ฝ๐ฒ ๐ผ๐ณ ๐ผ๐ฝ๐ฒ๐ฟ๐ฎ๐๐ถ๐ผ๐ป๐ฎ๐น ๐ฟ๐ถ๐๐ธ๐ ๐ณ๐ฎ๐ฐ๐ฒ๐ฑ ๐ฏ๐ ๐๐ต๐ฒ ๐บ๐ฎ๐ป๐๐ณ๐ฎ๐ฐ๐๐๐ฟ๐ถ๐ป๐ด ๐๐ฒ๐ฐ๐๐ผ๐ฟ?
The typical operational risks encountered by manufacturing entities encompass challenges related to employee behavior, third-party involvement, data breaches, and the potential for losses arising from insufficient internal processes and controls. Additionally, there are inherent risks such as those stemming from cultural, moral, and ethical considerations. At the forefront of these challenges are technology risks, particularly as organizations adopt new technologies like automation, robotics, and artificial intelligence, amplifying the complexity of the risk landscape.
๐ง๐ต๐ฒ ๐ฏ๐ฟ๐ผ๐ฎ๐ฑ ๐ฐ๐ฎ๐๐ฒ๐ด๐ผ๐ฟ๐ถ๐ฒ๐ ๐ผ๐ณ ๐ฟ๐ถ๐๐ธ๐ ๐ฎ๐๐๐ผ๐ฐ๐ถ๐ฎ๐๐ฒ๐ฑ ๐๐ถ๐๐ต ๐ฏ๐๐๐ถ๐ป๐ฒ๐๐ ๐ฎ๐ป๐ฑ ๐ผ๐ฝ๐ฒ๐ฟ๐ฎ๐๐ถ๐ผ๐ป ๐ฟ๐ถ๐๐ธ ๐ฟ๐ฒ๐น๐ฎ๐๐ฒ ๐๐ผ:
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Business interruption
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Product failure Risks
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Failure of IT system
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Errors and omissions by employees
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Fraud Risks
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Long ongoing Litigation
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Loss of key management personnel
When assessing the influence of operational risk, three key areas significantly impact the business operations.
๐๐ถ๐ป๐ฎ๐ป๐ฐ๐ถ๐ฎ๐น ๐ฒ๐ ๐ฝ๐ผ๐๐๐ฟ๐ฒ๐:ย These pertain to the risks encountered by everyone associated with the business, encompassing employees, customers, suppliers, and contractors.
๐ฃ๐ฟ๐ผ๐ฝ๐ฒ๐ฟ๐๐ ๐ฒ๐ ๐ฝ๐ผ๐๐๐ฟ๐ฒ๐: These pertain to the tangible assets owned or held by the business.
๐ฃ๐ฒ๐ฟ๐๐ผ๐ป๐ป๐ฒ๐น ๐ฒ๐ ๐ฝ๐ผ๐๐๐ฟ๐ฒ๐:ย These encompass the risks encountered by individuals collaborating with the business, such as employees, customers, suppliers, and contractors.
Effective and efficient operational risk management relies upon having a clear-cut understanding of the strategy, products, and processes of the business enterprise. in our next post, we will deep dive into it.