Common Challenges to Asset and Risk Management

To ensure that companies can maximize their physical assets and make them yield the highest ROI, they need to have an in-depth understanding of their assets and the risks they pose. Businesses could make poor decisions without an understanding of the risks. This could ultimately affect their bottom line. Insufficiently developed process for managing risk and assets could also expose companies to costly fines from regulatory agencies or loss of profits due to insufficient plan for the unpredictable.

The management of risk and assets is confronted with a variety of issues.

Unawareness of the capabilities the assets of an organization. For instance, employees might not be aware that a piece of equipment is able to perform a function that is not within its intended scope or even know how to operate it at its highest efficiency. This could cause the equipment to be neglected and thus have a reduced ROI over its lifespan. This can be avoided by ensuring that employees have adequate training to comprehend the capabilities of the asset and how to use it in a responsible manner.

Lack of a robust process to manage risk – The constant stream of compliance-related demands that have flooded the market since the financial crisis have left many companies with no time to think about strategic risk factors. This has led to suboptimal risk strategies, inaccurate methods of assessing risk, and forgone opportunities to optimize the performance of an organization’s assets.

Third-party Risks ranging from cyber-security to integrity of data and reputational damage could have huge implications for a business. To mitigate the risk of this kind, a robust vendor vetting process should be put in place with failsafe processes in place to ensure every vendor is properly vetted.