Conclusion

In this free course we have:

• Explored the range of risks that organisations may be exposed to. We have not only introduced ourselves to the main financial risks but also to the other risks which may indirectly impact on the finances of organisations – such as operational, reputational and legal and regulatory risk.
• Examined how the process of risk management should be implemented within organisations – thereby providing the structure for examining each type of financial risk in detail.

The free course provides an overview of the risk management process which should be embedded in the operations and governance of every organisation. There is, however, no ‘one size fits all’ way of implementing risk management. Instead the process must be tailored to fit the size, complexity, industry competition and environmental uncertainty facing the organisation. For a small organisation the process may be very informal, while for a company like BP or Unilever it must be much more formalised, documented and provided with dedicated resources in the form of staff and budget.

It is important that the individual risks are not looked at entirely in isolation from each other. Doing so is what is known as a silo approach to risk management. Instead, managers must develop a holistic view of risk. Organisations may have small exposures to the individual risks, but when these are aggregated they may have, in total, substantial financial and non-financial risks that require careful management.

What we do certainly know – given the recent catalogue of high-profile financial calamities – is that the failure to manage risks can have devastating and, on occasion, terminal outcomes for organisations.