THE IMPORTANCE OF

BUSINESS RISK
ASSESSMENT

WHAT IS RISK?

The possibility that an event will occur and

adversely affect the achievement of objectives.
Any future event that may affect the achievement
of business objectives is considered a risk.

EXAMPLES OF RISK

Possible risk for LFUG GOC might include: African

Swine Fever, closure of a business affiliate, major
supplier or customer, new regulatory
requirements by BIR, DOLE or FDA, outside
competition, high turnover of employees and
other possible events that will affect the GOC
objectives.

RISK ASSESSMENT

Risk assessment lets you classify and analyze

potential risks and rank them as to how they
could affect your business. LIKELIHOOD or the
chance of happening of the risk and SEVERITY or
the impact of potential harm is being assessed.
WHEN will it happen and HOW or HOW MUCH are
we affected?

INTERNAL CONTROLS

These are the preventive, detective and corrective

measures placed by the management since the
establishment of the business which include
policies, procedures and monitoring activities.
These aids the achievement of objectives and
initial mitigation of risks encountered.

RISK TREATMENT

These are the specific action plans related to

specific risks identified. In treating the risk, you
can avoid, reduce, transfer or accept the risk.
Quarterly Enterprise Risk Management or ERM
activities by IAD promotes risk assessment
awareness by monitoring new risks, controls and
related treatments

AUDIT ALERT 2019-07

WWW.ONLINEBANKTOURS.COM/B/ARTICLE.PHP?B=2142&ID=545
How can we treat our business risks?

AVOID

Eliminate the cause of the risk

RISK: Inefficient production line

RISK TREATMENT: Review production layout to eliminate non-
value adding production activities

RISK: Accidents from old equipment failure

RISK TREATMENT: Regular inspection and immediately repairing
or removing old equipment based on assessment to avoid
accidents

REDUCE

Stop or minimize damages or losses

RISK: Production of substandard or defective products

RISK TREATMENT: Placement of quality control process per
sub-process or per critical sub-process to immediately stop
production of that item upon discovery

TRANSFER

Assign contractual responsibilities to outside source

RISK: Additional labor and insurance cost of employees to hire

RISK TREATMENT: Getting employees needed from agency or
contractor

RISK: Destruction of company assets or business property

RISK TREATMENT: Getting insurance coverage for company
assets

ACCEPT

Implement active acceptance

RISK: Natural calamities like typhoon, flood,
earthquake, etc.

RISK TREATMENT: Develop contingency plan or

disaster recovery plan to execute upon happening of
the risk

AUDIT ALERT 2 0 1 9 -0 7
..

W W W . O N L I N E BA N KT OU R S . C O M /B / AR T I C L E .P H P? B = 2 1 4 2 & I D = 5 4 5