For companies to optimize their physical assets and make them deliver the best ROI, they need to have an understanding of both their assets as well as the risks that come 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 could expose companies to costly fines from regulatory agencies or lost profits because of insufficient plan for the unpredictable.
The most frequent and significant challenges to managing risk and asset management are:
Unawareness about the capabilities of the assets of an organization – For instance, employees might not be aware that an item could perform a task outside of its intended scope or even know how to operate it at its highest efficiency. This can lead the asset to be inefficient and suffer an inferior ROI over its lifespan. This can be prevented by ensuring that employees are educated to know the capabilities of an asset and how to utilize them appropriately.
Insufficiently developed processes for managing risk – The continuous demand for compliance that have flooded the sector since the financial crisis have left many companies with a lack of time to think about strategic risk considerations. This has resulted in suboptimal risk management strategies, ineffective risk assessment methods and missed opportunities to improve the performance of the assets of an organization.
Third-party risk from cybersecurity to data integrity and reputational damage Third-party risks can result in significant consequences for an organization. To reduce this kind of risk, a robust process for vetting vendors should be implemented with failsafe procedures in place to ensure all vendors are properly approved.