To maximize the value of their physical assets and help them return the most it is essential to have a an understanding of both their assets and the risks associated with them. Without a clear knowledge of the risks, businesses may make unfounded choices that will ultimately hurt their bottom line. Insufficient risk and asset management system can leave organizations vulnerable to regulatory fines or loss profits due to inadequate planning.
The most common and significant problems with the management of risk and assets are:
Unawareness of what a company’s assets can do For instance employees may not be aware that a piece of equipment has the capability to perform a function beyond its original scope or to operate it at the highest efficiency. This can cause the asset to be neglected and thus have an inferior ROI over its lifetime. This can be mitigated by ensuring that employees receive the proper education to understand the capabilities of an asset and how to use it properly.
Insufficiently developed processes for managing risk – The continuous demand for compliance that have flooded the market since the financial crisis has caused many companies to have little time to consider strategic risk considerations. This has resulted in suboptimal risk strategies, inaccurate methods of assessing risk and missed opportunities to optimize the performance of the assets of an organization.
Third-party risk – From cybersecurity to data integrity and reputational damage Third-party risks could have devastating consequences for an organization. To reduce the risk, a rigorous procedure for vetting with failsafe protocols should be implemented to ensure that all vendors have been recognized.