Risk Assessment and RetentionRisk assessment and risk transfer should be considered primary strategies for protecting corporate assets and shareholder value. The Sarbanes-Oxley Act of 2002 has increased the responsibilities of officers and directors, and it is not difficult to envision corporate management being placed in line for the liability of a company which failed to protect its assets by way of risk management and risk transfer. The shift toward greater expectations for effective enterprise-wide risk management is driven by the fact that the types and complexities of risks affecting an enterprise are increasing.
Rapid changes in information technologies, globalization, outsourcing, greater complexity of business transactions, and increased competition make it much more difficult for boards and senior executives to effectively oversee the constantly changing portfolio of risks facing the enterprise.At the same time, many of the risk management techniques used by boards and senior executives are often ad hoc. In response to these trends, many organizations are embracing an emerging business practice known as enterprise risk management (ERM) that emphasizes a holistic approach to risk management for the entire enterprise.
The goal of ERM is to increase the likelihood that an organization will achieve its objectives by managing risks to be within the stakeholders’ appetite for risk. ERM done correctly should protect stakeholder value through the right set of risk assessment, transfer and retention strategies.Enterprise Risk ManagementSeveral conceptual frameworks have been developed in recent years that provide an overview of the core principles for effective ERM. In 2004, the Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued its Enterprise Risk Management-Integrated Framework, with this definition of ERM
Enterprise risk management is a process, effected by the entity’s board of directors, management, and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within the risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.ERM has to be driven from the top. The board of directors and senior executives set the tone and direction. For ERM to be effective, it must be embedded in and connected directly to the enterprise’s strategy.
The goal of ERM is to help the enterprise achieve its core objectives.Assessment of Strategic Business RiskThe first step in effective risk management is finding a way to systematically evaluate a company’s strategic business risk. That must begin with defining the entity’s use of the term “risk.” Michael Porter’s definition in his landmark book, Competitive Strategy is useful: “Risk is a function of how poorly a strategy will perform if the ‘wrong’ scenario occurs.”Before management can effectively manage risks that might be identified by various scenario analyses, they need to define an overriding risk management goal. Otherwise, they won’t be able to appropriately determine whether identified risks are within acceptable tolerance levels.
The Return Driven Strategy framework describes how an enterprise’s strategy can be aligned with the ultimate objective to: “Ethically Maximize Shareholder Wealth.”Risk Retention and Risk Transfer StrategiesAs risks are identified, they must be continuously assessed and managed by way of retention or transfer. In the realities of today’s business world, all assessed risks are managed in one way or another. Whether that management is to ignore the risk, retain or transfer the risk will be one of the critical lynchpins which determines corporate value. These decisions will determine the potential effect and extent of disruption to corporate assets, customers, reputation and shareholder value.China: Opportunities and RisksAssume your company is planning to manufacture in China and import product to the US market.
As the recent scenarios of the importation of products with lead based paint demonstrate, an ERM analysis is critical. The departments with primary responsibility should identify and assess the risks of the decision. For instance, manufacturing and legal should be involved in pinpointing facts that distinguish China production. Cost of production, manufacturing feasibility, political climate and regulatory status will likely be some of the reasons a decision was made to manufacture in China. These facts will naturally point to some risk creating a “critical risk pocket.” SM A “critical risk pocket” SM denotes a parameter of risks which could occur depending upon developing facts. Manufacturing and legal will create a risk pocket involving differences in domestic manufacturing requirements and the potential that legal, and other issues, may arise from these differences.Identifying and Managing Critical Risk Pockets SM
Focusing on each critical risk pocket, SM the potential effect on the company assets should be considered. Once assessed, then the company must determine how much, if any of that risk, it wants to assume or transfer. Whether to protect corporate assets by purchasing insurance, self insuring, creating a captive, or using other products, requires specialized knowledge and experience taking into consideration numerous factors including: emerging legal, regulatory and political trends, the corporate market, the geographic reach of the company, loss ratio, available risk transfer products and options.
Risk Transfer and Retention StrategiesThe continuous assessment of risk and the development of risk transfer and risk retention strategies should be an integral part of the business strategy and its execution. Effective risk plans with the support of professional expertise can help to manage enterprise-wide risks more effectively by focusing on risk management activities that protect corporate assets and shareholder value. Strategic risk plans can provide a powerful force for continuously evaluating portfolio of risks facing an enterprise and proactively developing countermeasures for dealing with the risks that constantly threaten the enterprise.Katherine Smith Dedrick, J.D., MBA, is a partner at the Chicago based law firm of Childress Duffy, Ltd., and a founding member of the consulting firm Risk Worldwide, LLC. Katherine counsels corporations in risk assessment and transfer initiatives focusing on asset protection and the alternative methods available to protect those assets, as well as post disaster insurance and capital recovery.
With the new amount of Loan Modifications coming into Mortgage Companies today it seems like an impossible task to handle and stay on top of all them. The very definition of a loan modification is Paperwork. It is essentially a legal process to renegotiate or modify an existing contract. Time management couldn’t be more important when handling this process. If you want to do it right and in significant volume you had better have a good workflow management system to keep your deals moving, yet keep them tightly managed.
Staying on top with loan modification software will give you the advantage you need to keep up with the workflow–helping you to help more troubled borrowers in less time.
Managing Customer Inquiries
In this market, loan modification requests are coming in all day and non stop. If you don’t have a system to manage these inbound leads and efficiently distribute them to loan counselors, your operation is dead on arrival.
The importance of serving loan modification customers is to show them urgency. Troubled borrowers are running against the clock–pending foreclosure, lost job, or other looming disasters. You are running against that same clock. Speed is key in renegotiating the loan. You want to be as fast as possible or your likely to lose the bank or investor their entire loan.
Qualifying Customers
Managing the flood of loan modification inquiries is only half the battle. After this work has been completed you most segment these customers into programs. Your loan modification software should assist you in managing customers through an organized pre-qualification process.
Lead management software can facilitate worksheets, calculators, and checklists to guide agents through a consistent process. This process should help you tag and route leads to the appropriate team or modification program.
Pipeline Management
Getting a loan modification done takes a lot of hand-holding of borrowers. That means managing a large pipeline. You are going to need to collect documents, review qualifications, make adjustments, and follow-up with customers.
Pipeline management tools within a CRM or lead management software will keep your loan modification deals moving through the process. Simple automation like emails, alerts, and task lists allow you to stay on top of every lead, increasing each agent’s total capacity.
Process of Getting the Loan Modified
Using loan modification software will increase the volume of loans you can process and in the end you will be modifying more loans. Loan modifications require careful and consistent processes. Lead management systems can enforce those processes and ensure all of your agents are being as efficient as possible.
Turbulent economy, shaky world order, the recent depression and not so commendable market events have highlighted the necessity of risk management solution within the financial sector. Management executives and board members needs to have an in depth understanding about the risks included in search engine optimization and how it can be managed without causing much damage to this zone. Various financial services provide solutions in order to improve company’s investment process. To meet different challenges submitted through the global recession, banks are fixated in improving the operational productivity, managing risks, compliance across various enterprises and competition in the market.Financial misadventure isn’t a new phenomenon. However the extensive damage it causes is huge.
On account of this the credibility of the banking sector is lost plus much more people these days decrease convincing about banking and coverage. Many people have no idea regarding how banks will certainly control and regulate their. Are there collateral management solutions that ensure safety while availing business financing loans?Folks have the legal right to know about such matters. Because of this officials are increasingly becoming increasingly privy to various risk management software along with the solutions that they provide to be able to know ahead of time the potential risks and help bank officials to produce smarter decisions that maximize value and reduce costs.Finance companies need to meet forthcoming regulatory requirements for risk management and capital. Bank managers need reliable management solution so as to direct money. How big the the possibility loses ought to be estimated, in order that the bank can stay within the edge.
Banks need mechanisms to keep track of positions and ought to create enticements for effective high risk. Risk management software provides exactly that. They satisfy the needs by intensifying key risks and obtaining operational measures. Such risk management solutions will likely assist in monitoring the resulting risk positions.With regards to finance and banking the definition of risk may consider reductions in firm value. Risk management solution therefore is aimed at enhancing the firm value and helps to take care of experience of risks especially credit risk and market risk. Market risk would be the improvement in the internet asset value. Various factors such as rates of interest, exchange rates and equity rates and commodity prices might influence market. Credit risk also involves change in net asset value but occur on account of changes in the ability of the counter party. Such risk factors may cause huge economic problems for finance institutions.
Risk management software supplies the precise banking solutions. They refurbish your budget executive’s exposure to like risks as well as efficient control over that. Effective banking solutions are supplied by numerous financial services throughout the world. Bloomberg, Sungard, Limit Trac, and Deal Hub are the Risk management solutions which provide the best type of collateral management and banking solutions.Measuring the number of risk ‘s time consuming. So it is crucial that finance institutions know about the impending risks beforehand. Effective financial services help bank officials active reporting of your like credit risk, market and collateral management. For very long time banks leaned on fliers and other modes like scorings, ratings and credit committees for tackling risks. Modern brings new risks. Therefore banks need advanced financial services to tackle them. To protect yourself from these risks, calculated measures should be taken prior to the system rots.