Design and Implementation of a Risk Management Model

A company can be defined as: “ An entity that generates value for its stakeholders from the ability to assume the adequate risks”. Because of this, we believe that a company cannot exist without taking risks.

A good Risk Management model assists companies into anticipating themselves to any event risk, working in a preventive way and not in a reactive one!

It starts with a proper identification and definition of the risks that affect the company. Each risk has a series of determinants- the factors that cause it- that must be identified and followed in a systematic way. Another key element of a good risk management model is the design of the mitigants of each risk, that are actions that lower the probability of occurrence and/or their impact. To complete the Risk Map, it’s important to measure the risks in both, its probability of occurrence and impact, generating the Heat Map.

Once the Risk Map is complete, it’s essential that a cultural change process occurs within the organization. This consists of the understanding of each one of the members of the company, that the risks that they are exposed to is something that involves everyone.

It will be necessary to form a risk management committee that works in a coordinated and interdisciplinary way, in the integral management of the risks of the organization. It will be integrated by the owners of the businesses who are, simultaneously, responsible for the risks of the whole organization. This committee will be coordinated by the Chief Risk Officer (CRO) and the Risk Management team, who will assure that everything is functioning correctly.