Business intelligence, common risks, why worry?
Business Intelligence: Example of An Advisory Outlook
According to the Advanced Performance Institute (USA) there are upwards of 150+ performance indicators for your business. Of these a typical SME might implement 10 main financial KPIs (Key Performance Indicators) for: revenues, gross margin, net income, EBITDA, inventory turns, contribution margin, operating expense ratio, revenue per employee, days sales O/S and payroll as % of sales.
In addition, KPIs can be installed for Customer behaviors, Sales and Marketing, Operations, Employee performance, Environmental factors and IT and Security.
Are you focused on the following business challenges?
- Aligning risk appetite of the Enterprise with its stated business strategy
- Strengthening risk decision-making, installing risk management tools/methodology
- Reducing operational surprises and negative impact of Losses and Damages
- Identifying emerging trends in your core market and planning a response
- Clarifying in-house innovative process and preparing better to seize Opportunities
- Improving access to Capital and efficiency of Capital deployment
Here are some of the typical Enterprise business risks that should be protected by insurance or by taking other risk mitigation steps:
- Business property and assets protection
- Business and public liability
- Worker’s compensation
- Auto and delivery fleet liability
- Health and medical expenses insurance
- Key man coverage for key employees
- Life and disability coverage for employees
- Employment practices liability coverage
- Directors and officers liability (D & O) coverage
- Export credit insurance on foreign creditors
- Cargo and freight coverage for goods
- Fidelity risks of theft, dishonesty and embezzlement
- Money in transit risks
- Political Risks on cross-border investments
- Equipment Breakdown
- Business Interruption
Sudden occurrence of one or more of these common risks can be costly to your business, dramatically reduce cashflow or even result in work stoppage for months. How resilient is your enterprise? Is there a Business Contingency Plan? Khidr Solutions can assist your business to be pro-active and risk-ready.
Why Worry ?
Strong business management these days depends upon many, sometime complex, factors including an owner’s leadership style in managing risks in a professional, structured manner.
The ICAEW Institute of Chartered Accountants (UK) states “The Key to growing the SME business is:
‘SMEs place too little emphasis on risk management. The so-called lifestyle business culture of most entrepreneurs is not immune from common pitfalls and growth business are often highly vulnerable. Business should i) develop a risk management specialism, ii) collaborate with private sector providers to help SMEs to development their own risk management strategies.”
Over 50% of SMEs have no formal process for accountability of decisions and work.
Only 19% of SMEs discuss risks at Board level annually or less often. Most risk management activity occurs when SMEs face a) major capital investment, b) additional financing needs, c) marketing campaign, d) IT project, or e) acquisition of another business.
Some 52% of SMEs have a formal process for identifying risks vs. 78% of Larger corporations.
Mr. Stephen Cross, CEO of AON Global Risk Consulting said in 2010 that “Long-term value can be found in the year-on-year improvement of risk understanding and “readiness”, including alignment of risk appetite with the resources used to manage risk across the organization. In the big picture, Enterprise Risk Management (ERM) will help manage the improve cost (of debt, credit, insurance) and opportunity (through enhanced governance, reputation and decision-making) of your business.”