Method of combining between risk and benefits in corporate governance

kết hợp giữa rủi ro và lợi ích trong quản trị

As an CEO, you know and apply a lot of management methods to your business, but when you hear about the method "Combining risks and benefits in management", you probably feel vague. because it is completely new and has not been included in all previous management theories or may be heard elsewhere in the field of investment or finance.

So why do we care and recommend this method? It stems from two main goals of business management and is also the desire of most business owners that are:

  • Control risks to minimize the risks of damage to the business
  • Manage activities to create maximum profits for the business

This method has been researched and proposed by us based on the risk assessment theory of ISO standards, the wishes of business owners and draws from experiments during the 17 years of working in this field.

The benefit of this solution is very significant for us to care and research:

  • Help identify the level of risk in the business
  • Identify risks of all activities in the enterprise
  • Identify jobs that create the most value for the business
  • Identify tasks that need to be controlled that ensure highest risk control with the most benefits
  • Making the system document list in the most streamlined way is neither missing nor redundant and is the foundation for establishing the right system from the beginning
  • Reduce a lot of unnecessary control activities wasting resources of the business...

You probably have heard a lot about safety risk assessment but very rarely heard quality risk assessment until ISO 9001 version 2018, the method of risk assessment in management. We are also based on ISO standards, but the scope of application is wider for the entire business operation (you can refer to the risk assessment method through the article Process risk assessment with 7 simple steps: https://lavan.com.vn/quy-trinh-danh-gia-rui-ro)

We also set up a benefit assessment method based on risk assessment, but the criteria are values that benefit the business, then the combination of the two results in a table. matrix to produce data from which we can determine the priority for the establishment of a control or management facility.

Steps to implement this method:

1. Define the severity of the risk, the possibility of this risk

2. Define levels of benefits, repeatability of jobs in the business

3. Establish a risk assessment process and a benefit assessment process

4. Implement a seven-step risk assessment process

5. Follow the seven-step benefit fraud process

6. Combining the two results of a risk assessment is a benefit (Figure 1).

7. Specifying the levels to prioritize the establishment of control measures based on the results of the above combination (Figure 2)

8. Make a list of documents that need to be compiled and work to be done to ensure maximum control of risks and bring the most benefits to businesses.

Figure 1: Table combination between risks & benefits

kết hợp giữa rủi ro và lợi ích trong quản trị

Figure 2: Solution for each level

This method can be applied in many different cases, but it is also quite complicated and time-consuming, especially the first implementation so we recommend only applying the following cases:

  • Implement when planning and building management systems
  • Implement when the enterprise has major changes such as: Restructuring of the business, changing strategies, visions, missions, policies, organizational structure, products or production technologies
  • Conducting periodic annual to ensure the control solutions are sufficient

So after performing the above method, we will do the following steps:

  • Making a list of documents to be compiled (there is a basis for setting up the system right from the beginning and showing the system-wide link in the compilation process)
  • Planning, assigning implementers and applying
  • Monitoring and evaluation to confirm the appropriateness of the evaluation process

Currently this method is relatively new and only applied to a number of businesses when consulted by Lavan's expert team or studied through the manual "building and operating the quality management system". And the feedback is quite effective and this is the reason we bring this method to readers

With the content presented above, we hope to bring a lot of useful values for you to consider to apply, especially to set up a new system, you can contact us for advice. more questions.

                                                                                                                       CEO Lavan Trading Company Limited
                                                                                                                          Nguyen Van