For companies to optimize their physical assets and help them yield the highest ROI they must have a an understanding of both their assets and the risks associated with them. Companies can make bad decisions if they don’t have an adequate understanding of the risks. This can ultimately hurt their bottom line. Insufficiently developed asset and risk management process his explanation could also expose companies to costly fines from regulators or loss of profits because of inadequate planning for the unforeseeable.
The most common and significant problems with managing risk and asset management are:
Inadequate awareness of what an organization’s assets can do – For example, employees might be unaware that a piece of equipment has the capability to perform a function that is beyond its original scope or to operate it with maximum efficiency. This can lead the asset to be underutilized and have lower ROI over its lifetime. This can be minimized by ensuring that employees are educated about the capabilities of an asset and how to use the asset in a proper manner.
Lack of a robust risk management procedures – Ever since the financial crisis, a lot of firms have had little time to think about strategic risk. This has led to inadequate risk strategies, inaccurate methods for assessing risk and missed opportunities to optimize the performance of the assets of an organization.
Third-party Risks ranging from cyber-security to integrity of data and reputational damage could have huge implications for an organization. To minimize this risk, a robust procedure for vetting with failsafe protocols must be implemented to ensure that every vendor has been recognized.
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