What is risk management?

A certain amount of risk is inevitable in any business. Working with partners and suppliers, employing staff, launching new products, competing with other businesses and expanding into new markets all open you up to some level of risk. The question is, how much risk can you afford to take with your business?

Risk management is the practice of pinpointing potential risks ahead of time, then evaluating, prioritizing, and taking steps to mitigate or avoid risk altogether.  Effective risk management involves putting processes in place for:

  • conducting thorough background research
  • protecting your digital assets, such as proprietary data, intellectual property and customers’ private information
  • complying with standards, regulations, laws and codes of practice.

By closely monitoring and minimizing risk, you can reduce the likelihood of negatively impacting your operations and maximize your business opportunities.

What is Risk Assessment?

In the business world, risk comes with the territory. Whether you’re considering partnerships or new suppliers, hiring staff, facing tough competitors, expanding into other markets or countries, launching a new product or investing in the latest technologies, a certain degree of risk is unavoidable.

That’s why risk assessment is key to a robust business strategy. Risk assessment is a process of gauging potential hazards for your business activities and determining the possible consequences should those hazards occur. In other words, it’s about looking at what can go wrong before it goes wrong so you can best prepare for and try to mitigate the danger to your organisation.

Companies use risk assessment as part of an overall risk-management scheme to reduce business risks, develop contingency plans for facing risks directly and establish disaster-recovery plans if the need arises.

Risk-mitigation process

Following risk assessment, it’s important for companies to have a risk-mitigation process in place. Risk mitigation, another component of risk management, is not about avoiding risk altogether – again, in business, a certain amount of risk is inevitable. Instead, risk mitigation is a preventative strategy for preparing for all potential risks and reducing the impact of these threats.

To lessen adverse effects to your organisation, a good risk-mitigation process typically involves screening and evaluating each threat, performing due diligence and necessary investigations, and ongoing monitoring of prospective dangers.

Types of business risk

Business risk can fall into a number of categories:riskmanagement
  • Strategic risk is risk that could keep your company from achieving its strategic goals and objectives.
  • Financial risk concerns fiscal transactions and your financial systems
  • Compliance risk refers to the necessity to adhere to standards, codes of practice, regulations and laws.
  • Operational risk involves your administrative and operational policies and procedures.
  • Environmental risk relates to external incidents that are often beyond your control, such as natural disasters, inclement weather and uncertain economic conditions.
  • Reputational risk refers to public regard for your company.

Why is risk management so important?

Risk management is a key component of strong management and corporate governance. A strong risk-management plan allows you to prepare for the unforeseen and unknown, so you can mitigate risk, curtail costs to your organisation and protect the future of your business.

With robust risk management, you can:risk-management

  • save time, money and assets
  • protect people, property and the environment
  • reduce legal liabilities
  • bolster your operational stability.

The better your risk management, the stronger, faster and more assured your critical decision-making can be.

Manage Risk with our Solutions

Nexis Diligence

Nexis Diligence™ is a risk-management tool that merges an unparalleled collection of global intelligence with user-friendly technology to help mitigate your business risk. It allows you to search premium business intelligence content, including:

Nexis Diligence™ also integrates a Report Builder that enables you to maintain verifiable due diligence audit trails to help you satisfy regulatory requirements and remain compliant.

With Nexis Diligence™, you can better understand your customers, employees, partners, suppliers and competitors so you can manage risks that could disrupt your business. The tool can also help you boost productivity, increase profitability, and inform and improve your decision-making.

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Nexis® Entity Insight

Nexis® Entity Insight is another tool for your risk-management arsenal. This supply-chain solution provides more transparency into your business risk and provides you with the information you need to proactively make decisions and pre-empt problems. You’ll gain invaluable insight into your global supply chain, partners, vendors and other business relationships – all of which expose your company to some degree of risk.

Armed with this information, you’ll be in a much stronger position to protect yourself from regulatory, reputational, strategic and financial threats.

By conducting global adverse media monitoring and capturing actionable business intelligence on your supply chain and third-party networks, Nexis® Entity Insight helps you manage risk and informs your decision-making.

The tool uses a PESTLE (political, economic, sociocultural, technological, legal and environmental) scoring framework that supports your company’s risk-based approach and helps you more quickly identify supply chain and third-party risk. It aggregates market intelligence and premium news sources that you typically don’t have access to on the open web, so you can paint a more comprehensive picture.

With Entity Insight’s® easy-to-use risk-management dashboard, you can:

  • review a snapshot of risk levels and trending risk areas before drilling down into specific risk profiles
  • manage active and pending entities, as well as the related RSS feeds
  • visualize news volume for all active entity mentions, colour-coded by PESTLE category
  • pinpoint the top 10 news volume trends among active entities and risk topics
  • explore the context of adverse media mentions and mitigate emerging risks.

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BatchNameCheck® is an automated tool that provides daily screening results and reports to help you identify and escalate individuals or organisations that pose potential risks to your organisation.

The tool provides access to:

  • global watchlists
  • sanctions lists
  • politically exposed person (PEP) databases
  • negative-news searches.

From these searches, you receive near-real-time results that enable you to make more informed business decisions and confidently move your business forward.

BatchNameCheck® automates background checks, strengthens your due-diligence practices and keeps you alert to compliance risk.

Ultimately, understanding and effectively managing your risk will help protect your business from financial, regulatory and reputational damage.

Diligence spotter®

LexisNexis Diligence spotter® is a dynamic case management, screening and risk assessment workflow solution. This software automates the process of screening and risk assessment, allowing for ad-hoc and batch screening and monitoring of global watchlists, PEPs and news content.

With Diligence spotter®, you can:

  • strengthen your risk-assessment process by managing cases, screening third parties, setting risk profiles and assessing risk
  • increase your case-management efficiency
  • proactively manage your know-your-customer (KYC) risk processes to safeguard against financial, regulatory and reputational damage resulting from corruption
  • efficiently and cost-effectively meet ever-evolving regulatory expectations and global standards with confidence

Ultimately, with LexisNexis’ comprehensive risk-assessment and risk-management solutions, you can properly arm your business operations against the unwelcome threats inherent in today’s global marketplace. With these tools in place and on the case, you can focus on what’s important – growing your company!

Check out Our Compliance Solutions

Frequently Asked Questions

Answers to some popular questions

What is risk management?

Risk management is the practice of pinpointing potential risks ahead of time, then evaluating, prioritizing, and taking steps to mitigate or avoid risk altogether. Read more

What types of risk management are there?

A strong risk-management plan allows you to prepare for the unforeseen and unknown, so you can mitigate risk, curtail costs to your organisation and protect the future of your business. Various risk management solutions available are: 1. Nexis Diligence 2. Batchnamecheck 3. Nexis Entity Insight  Read more

Why is risk management so important?

Understanding and effectively managing your risk will help protect your business from financial, regulatory and reputational damage. Read more

What are the benefits of risk management?

With robust risk management, you can: 1. save time, money and assets 2. protect people, property and the environment 3. reduce legal liabilities 4. bolster your operational stability. Read more

What are risk management programs?

To quantify, qualify, and mitigate specific concerns an organization may discover they utilize some risk management programs like PESTEL analysis. Read more

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