Enterprise Risk management is an essential element of the strategic management of any organization and should be included in the ongoing activities of the business. It is the process of identifying and addressing any kind of event that represent risks to the achievement of objectives, or to opportunities to gain a competitive advantage in the market. Enterprise Risk management is the assessment of significant risks and the implementation of suitable risk responses. Risk responses include acceptance or tolerance of risk; avoidance or termination of risk; risk transfer or sharing via insurance, a joint venture, or another arrangement; and reduction or mitigation of risk through prevention activities.
Enterprise Risk management comprises positive and negative risks that are two sides of the same coin, despite having very different consequences. It may seem difficult to assess and monitor positive risks since they only help the organization and they provide a unique approach to risk analysis and the organization’s risk exposure.
When a positive risk materializes indirectly represents a failure in risk management processes, which either failed to identify a human error or were not sufficiently accurate in their assessments.
So to get a clear picture of the positive risk and negative risk, you can look below -
Project Management
During the project, some events happen that can reduce the total cost of production. Also, miscalculation resulted in higher than necessary budget figures that could later be reduced. So it falls under the category of positive risk.
The absence of action plans to deal with budget overspending can create a negative risk for the company. The allocation of resources to complete a project is always a messy task; meanwhile, project interruptions or delays can be exponentially more costly than the original budget overrun.
Assets and investments
When the actual useful life of an asset exceeds the estimated useful life, that is a positive development.
When a particular tool, asset, or infrastructure fails to serve the prescribed goal and gets degraded earlier than expected, that can result in a partial or total stoppage of a production line.
Technology
Organizations investing in technology and tools to enhance functionality in order to get better efficiencies, mitigate negative risks, and improve communication. These changes can directly benefit companies and open up capabilities to increase productivity.
There is a wide variety of negative risks in the technology sector that can interfere with the achievement of the company’s objectives and hinder its growth. It is really difficult to allocate them until they occur and cause damage of all sorts.
Development
As a company develops a new product or service, it assesses different factors, it is easier to perceive the relationship between positive risk and opportunity compared to other areas.
A new product or service always requires some time to come into the light for the customers. It is always possible that it will not be attractive to customers and consequently fails. Therefore, regardless of the proposal or the investment in market research, there are numerous risks associated with it.
Fncyber provides Integrated IT Risk Management Service, with its hybrid approach, utilizes both top-down and bottom-up frameworks to understand how Cybersecurity Risk is perceived in all organizational layers. They have an understanding of how risk and capabilities travel across the Enterprise.
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