RISK MANAGEMENT ("The Unseen Predator")

A recent article I read from RM Magazine described risk management as an unseen predator due to the colossal failures seen recently in the economy. I thought this article was interesting because it focused on recent failures, such as AIG, and brought up how they thought risk management would soon undergo many changes. In particular, noting the new presidential administration, with the inauguration of Obama, and how he would likely change things.

The article explained how investor confidence has been shaken to the extreme. It said that many increased regulations would likely be coming out of Washington soon from Obama's administration, as the new Congress convenes. Those new regulations would likely be broad in nature and apply to a whole host of industries, not just the financial sector. Since "after all, there are thousands of publicly traded companies, private companies with public debt, companies that trade in the commodities markets, and organizations that have 401(k) programs in various stocks, bonds and other funds."

One of the things I found most interesting about the article were their suggestions on how companies should start to view risk management. Saying that organizations need to stop viewing risk management as something that constrains their profits, and more as something that is integral to achieving business objectives. Although at the same time it is noted that sometimes risk is necessary, such as for starting new businesses, for insurance companies, advances in health care, etc.

I do think that from looking at most companies today they are starting to focus more on risk management and its importance. Though sometimes risk is unavoidable or even good, each company still needs to make sure it is actively managed and monitored.