To maximize the value of their physical assets and make them provide the highest ROI, they need to have a firm grasp on both their assets as well as the risks that come with them. Businesses could make poor decisions in the absence of a good understanding of the risks. This could ultimately affect their bottom line. Insufficiently implemented process for managing risk and assets can expose businesses to costly regulatory fines or losses because of insufficient planning for the unexpected.
The most common and significant challenges to asset and risk management include:
Inadequate awareness of what an organization’s assets are capable of – For example, employees might be unaware that a certain piece of equipment has the capability to perform a task beyond its original scope or to operate it with the highest efficiency. This could result in under-utilization of the asset and a decreased ROI throughout its lifetime. This can be mitigated by ensuring employees are properly educated about an asset’s capabilities and how to utilize them effectively.
Lack of a robust process to manage risk – The continuous stream of compliance requirements that have flooded the market since the financial crisis have caused many companies to have little time to consider strategic risk considerations. This has led to poor risk management strategies, incorrect risk assessments, and missed opportunities to maximize an organization’s assets.
Third-party Risks – From cyber-security to integrity of data, and reputational damage can have profound implications for an organisation. To reduce this type of risk it is essential to have a thorough vendor vetting process must be put in place with failsafe processes in place to ensure every vendor is properly vetted.
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