It is undoubted that risk is evident in every enterprise, entrepreneurship is all about taking well calculated risk. One can never bring risk to nil but can at least manage risk effectively reducing it to an acceptable level which a risk technician would call residual risk. There are a couple of operational risk management mitigation tools ranging from risk transfer to risk avoidance, one of the main mitigating tools is the setting and implementation of controls.
Controls are subdivided into the following main categories; Directive, Preventative, Detective and Corrective controls. Below is a brief explanation of all the available controls that one needs to come up with to effectively manage risk.
This is done through policy, where management provides direction. This also typically includes operational manuals and set procedures.On a horse one would use a bridle and a harness to accomplish this.
This is a exceptional group of controls which do not need much human intervention once they are functional, on a horse one would use blinkers or blinders which immediately prevents the horse from seeing to the rear and in some cases to the sides, so this keeps the horse on track. On an ERP system one can use programing to prevent the input of numbers in a field where only text is required, these are automated controls. This is one of the best control.
These are sensors and red flags, controls which detect the occurrence of an adverse situation or risk hence allowing speedy reaction before the situation is uncontrollable, an example of such would be listening to your horse’s sounds signifying fear or discomfort, routine hoof checks are detective controls too.
Just like the detective controls, these are used when a risk event has already occurred, one would use a whip to bring a horse back on the road. This is remedial action, Reconciliation of accounts is also an example.
Now that we all know what controls are and the set of controls we have at our disposal to manage risk, therefore do not always shy away from taking risk, another author said that great opportunities are usually disguised in challenges, so do not die wondering…try something new – horse riding maybe... or kickboxing or Perhaps you can also venture into new wild, untamed markets of Africa.