To optimize their physical assets, and to make them deliver the highest ROI, businesses must have a firm understanding of their assets as well as the risks that come with it. Companies can make bad decisions without an adequate understanding of the risks. This can ultimately hurt their bottom line. Lack of a solid process for managing risk and assets can expose businesses to costly fines from regulators or loss of profits because of inadequate planning for the unforeseeable.

The most frequently encountered and significant problems with managing risk and asset management are:

Unawareness of the capabilities of the assets of an organization. For instance, employees might not be aware that an item can perform a job outside its intended scope or even know how to make it operate at maximum efficiency. This can lead to underutilisation of the asset and a decreased ROI throughout its lifetime. This can be avoided by ensuring that employees have adequate training to comprehend the capabilities of an asset and how to use it effectively.

Insufficiently developed processes to manage risk – The constant demand for compliance that have flooded the market since the financial crisis has left many companies with little time to think about strategic risk factors. This has led to suboptimal risk management strategies, ineffective risk assessments and missed opportunities to optimize the assets of an organization.

Third-party Risk – From cyber-security to integrity of data, and reputational damage could have huge implications for an organisation. To reduce the threat, a thorough procedure for vetting with failsafe protocols should be implemented to ensure that all vendors have been properly approved.

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