The Risk Index
WHY AN ORGANIZATION MIGHT TRACK THIS
- Are we prepared for natural and man-made disasters like floods, hurricanes, earthquakes, fires, and acts of war or terrorism?
- Are we taking appropriate and intelligent risks with R&D and innovating new processes?
- Are we managing risks associated with our supply chain?
- Are there risks of major lawsuits from our policies, practices, products, or services?
- Are we managing financial risk properly?
- Are we managing risk associated with legal and regulatory compliance?
Why Is This Information Important?
Life is risky, business is risky; we all take risks every day when getting up in the morning and deciding to go to work. We do what we can, and most of us try to feel safe doing things we have to do to survive and support our families. Yet few individuals or organizations have a good measure of the risks they face on a daily basis. About the only type of risk that does get quantified and assessed is investment risk.
Brokerage and financial management firms tend to have pretty good risk metrics for assessing their own portfolios and those of clients. Insurance companies also usually have pretty good risk metrics that look at the likelihood that they will have to pay a claim. It is shocking when big insurance companies like AIG almost go out of business because of taking too many risks. It appears that greed overpowers fear and risk in most cases. Measuring the risk of your portfolio of investments is certainly ...