Risk Assessment in Enterprise Risk Management: Techniques and Best Practices
In the vibrant business world of Ghana, where tradition meets innovation, understanding potential challenges and opportunities is crucial.
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Think of a fisherman in Elmina gauging the weather before setting sail. That's risk assessment in business terms. Today, let's dive into its essentials in a Ghanaian context, keeping it straightforward and relatable.
What is Risk Assessment?
Picture you're organising a traditional Ghanaian durbar. You'd ponder: Will it rain? Have I considered the preferences of all tribal leaders? Will the hired band be punctual? Risk assessment is the method of identifying and evaluating possible challenges a business could face.
Techniques in Risk Assessment
Let’s look at the foundational one, even though there are many more:
1. Brainstorming: Imagine gathering the elders in a village under the Onyina tree to deliberate on community matters such as an upcoming festival. Their combined wisdom is invaluable. Similarly, businesses assemble their teams to pinpoint potential risks through collective knowledge. Through this process, they may also identify very good opportunities for the business.
2. SWOT Analysis: A tool where businesses list their Strengths, Weaknesses, Opportunities and Threats. It's akin to a cocoa farmer in Kumasi knowing the best seasons for harvest, the pitfalls and new regions with booming demand. Or a fisherman in Cape Coast, aware of the sea's moods, the best fishing spots and areas to avoid during turbulent weather.
3. Checklists: Over time, businesses, like seasoned kente cloth weavers and craftsmen, like the bead makers of Krobo, develop checklists, ensuring that no critical aspect is missed in their intricate designs, and ensure consistency in their creations.
Best practices in risk assessment
1. Be Comprehensive: When planning a durbar, one wouldn't merely prepare for a potential downpour but also consider the local chieftain's availability. Similarly, a thorough risk evaluation looks at all scenarios, no matter how remote they seem.
2. Stay Updated: Business environments, like Accra's bustling Makola Market, are ever-evolving. Regular updates ensure businesses aren't blindsided by new developments.
3. Involve Everyone: Just as every member in an Akan clan has a voice, different departments in a business offer unique risk insights. Making sure everyone is involved helps see risks from all angles.
4. Prioritise: All the things that adversely or favourably affect the business aren't of equal weight. It's important to differentiate between minor and major challenges, much like discerning between a brief power cut and an extended 'dumsor' period.
5. Have an Eye for Opportunities: Just as Ghana's vibrant culture is full of possibilities; every business risk may hint at an underlying opportunity. For example, local textile businesses facing cheap imports might venture into unique designs that are distinctively Ghanaian, creating a niche market.
6. Document Everything: Recording risk assessments is akin to how Ghana's rich history is preserved through oral traditions and tales. It serves as a guide, narrating past decisions and their outcomes.
7. Review and Adapt: Much like how Ghanaian cuisines have evolved while retaining their essence, businesses should revisit their risk strategies, making alterations as needed.
8. Embrace Technology: With Ghana's tech hubs like the one in Osu gaining prominence, many digital tools can simplify and refine risk assessment processes.
Conclusion
Ghana has always been a land of resilience, innovation and vibrant culture. Similarly, with a robust risk assessment, Ghanaian businesses can not only navigate challenges but also harness them, turning potential threats into opportunities. In the heart of Ghana, risk isn’t just about caution; it's about growth, innovation and a bright future.
The writer is an independent Internal Audit Advisor, Enterprise Risk Management Consultant, and professional trainer. He is the founder and Chief Operating Officer of Redric Consulting, your trusted partner for comprehensive training and consulting services in the fields of Governance, Risk, and Compliance (GRC).
With a proven track record in Internal Audit, Internal Control, Compliance, Fraud Risk Management, and Cybersecurity, Redric Consulting empowers your organisation and ensures its success.
You may reach out to Frederick at [email protected]
The writer is the Chief Operating Officer at Redric Consulting