Risk Management The Changing Landscape - 1112 Words

Risk Management: The Changing Landscape The landscape of risk management has changed considerably over the recent years. Once where its role was limited to pure loss exposure and it was viewed as a means of crisis management, it has now gained priority and become the key to competitive advantage. Companies are investing in and trying to advance their risk management capabilities. Four years ago when the industry had started to recover from the global crisis, risk management appeared to it more like crisis management. But now it has assumed the role of a forward looking approach towards managing a large spectrum of business risks which can enable sustainable long term growth. It is why risk management has assumed a higher priority as well†¦show more content†¦(Complianceweek, 2008) The process of risk management has been greatly influenced by the evolution of financial markets and institutions. Over the last decade the financial market has undergone rapid and profound changes. As the market has evolved, with it the means of risks management have also broadened dramatically. The changes in our financial environment include new computing as well as telecommunication technologies and along with reduction in legal and regulatory barriers to entry. The global financial crisis also revealed weaknesses in the risk management tools and practices industry wide. In the light of the recent changes a few things have become absolutely essential for companies. The first is linking risk to business performance. Companies need to create processes and mechanisms which link risk to business performance. Risk management under the current scenario also includes measures like highly sophisticated measurement, modeling and analytics for anticipating risks as well as integrating risk management capabilities with the organizational structure and across business units. Similarly, developing relationships with regulatory agencies as well as managing regulation and compliance has also become essential. (Butcher, 2011) Apart from all, detailed training on risk management and infusing risk awareness across the organization is also essential. In short,