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! This allows them to foresee problems and be ready to take advantage of the opportunities.
A good risk management model needs a process of cultural change that allows the people who are responsible for the business to understand, in a collaborative way, their risks. The business and the risk team, instead of operating in a separate way, need to work together towards an integrated management of the business with the associated risks.
Support in the Operation of Risk Management
We see a lot of companies that have their risk management model correctly designed and implemented but, either because of lack of cultural adequacy, or because of no commitment, they end up using the model in an incomplete way. A tracking of the determinants is not done correctly, the mitigants are not updated, the risk management committee does not meet as often as they should, the cultural change in the organization does not occur, etc. These situations cause that when the risks and opportunities do appear, the organizations are not prepared and not able to work out the problems in a correct way, nor take advantage of the opportunities that are presented in front of them.
In Upside Risks we offer an external Risk Management service, in collaboration with the management team of the organization.
Strategic and Financial Planning
Strategic planning influences the financial management of the company, so they cannot be dissociated from one another. Strategic decisions define the roadmap of the financial management, and it is important for the managers to recognize their interrelation. A good strategic planning must show the business’ basic financial needs.
In a company’s growth plans, it is common to underestimate the financing needs it generates in the organization. It’s normal to see accurate estimates regarding the CAPEX investment needs, it’s equally common to see that the investment needs in Financial Needs for Operations are systematically underestimated and misunderstood.
Compliance
Nowadays, it’s impossible to think of a company without a Compliance model that assures the fulfillment of the obligations, from a legal and an ethical point of view. At Upside Risks we help our clients perform an identification process of their principal risks of compliance, recognizing their determinants and defining their main mitigants. This is important to design a norm that works towards compliance within the organization.
Geopolitical Risk
Companies, and especially those that carry out their operations in more than one country, are exposed to economic, political and social events. Actions carried out by the rulers of the countries, macroeconomic difficulties, social crises or new demands from the population can cause a great impact on companies. Managing these events intelligently and anticipating them constitutes a strategic advantage for companies.
At UpSide Risks, we help companies with a methodology that allows us to monitor, quantify and detect geopolitical risks with an impact on them.
Company Valuation and Evaluation of Investment projects
The Theory of Value is complex. A running company or an investment project generates cash flows that have a value. To estimate the cash flows is a complex process because one must estimate the future, with the present information, taking into account possible volatile sources and the disruptions in the future. Once this is done, the second part of the process starts: estimating its value at the valuation moment.
We apply this method in the company valuation and in the profitability analysis and/or convenience of the investment projects.
