It’s been well over a year since Hurricane Sandy unleashed its wrath on the New England area, causing many organizations to halt operations for months, and in some cases, to shut down completely. While one would think the effects of Sandy would cause those in leadership to amp up their disaster recovery plans, the results of a recent survey prove otherwise.
A New York-based agency polled business owners and managers in New York City, New Jersey, and Connecticut whose organizations were affected by Sandy last year. An astonishing 52 percent answered that their organization was not “financially prepared for another disaster,” which experts feel is a strong indicator that other organizations within the area are also not prepared to handle an event of that magnitude, either due to lack of appropriate finances and/or the means to deal with such a disaster.
Only 3 percent of those polled answered that they had taken the steps necessary to protect their organization by accessing more financing. Fifteen percent had taken steps to invest in and protect their organization’s technology, and 10 percent said they invested in infrastructure.
Research conducted earlier this year by two different organizations has revealed that both chief financial officers (CFOs) and board directors are paying more attention to risk management than ever before.
In a poll conducted by the Institute of Internal Auditors, 35 percent of respondents, about one-third of those polled, noted they would like to focus more of their attention on risk management and risk management effectiveness. Risk management came in second only to information technology and compliance and regulatory issues.
Research jointly conducted by American Express and Co. and CFO Research revealed CFOs will “likely have a greater role in risk management in 2014,” attributing this prediction in part to the “enhanced role” CFOs play in business operations. The report also shared that taking on a role in risk management strategies can help foster a CFO’s conflict resolution abilities and develop skills that cater to the unique goals of the organization.
Both board directors and CFOs can play a very important role in an organization’s risk management strategies. They can offer valuable insight other leaders in an organization might overlook or may not even acknowledge. Of course it also helps to have the assistance of a professional who can provide …
Some people say you can never judge the future from the past; however, risk analysts use this approach in determining future losses for businesses. Your non profit organization’s lost history can be used to forecast your future loss frequency and severity. This type of study of past data is called trend analysis and can benefit your organization by determining the loss exposures that your non profit is most susceptible.
Exposure to loss can be determined through identifying items that are subject to loss and the perils that cause them. Also, understanding the financial consequences involved with losses can help your organization prepare for future ones. Trend analysis helps determine these loss exposures so you can prevent them from happening in the future.
Low severity claims usually happen more often than severe claims. Different organizations may be subject to different loss exposures. Based on the types of operations your non profit partakes, your organization can have special risks that other organizations may not have. It is important to identify these special risks in order to enforce effective risk control. Through using proper risk management and identifying situations that can become a loss, you can lessen the chance of a loss occurring and better protect your customers. …