Michael D. Moberly February 23, 2012
The increasingly complex, intertwined, and challenging process of mitigating – managing company risk, requires us to include intangible assets in the risk management equation! Managing risk today must also include recognizing internal vulnerabilities that allow materialized risks, with increasing regularity, to cascade (ripple) throughout a company, thereby multiplying adverse effects and consequences.
On both counts, this is because 65+% of most company’s value, sources of revenue, sustainability, and growth potential today evolve directly from intangible assets.
Mary Adams of I-Capital Advisors, appropriately points out that risk management needs to have a strong focus on business processes because that’s what knowledge-based (intangible asset intensive) companies do best, create and optimize their business processes.
Too, says Robert Liscouski, an expert in risk identification and management of intangibles, there must be well coordinated processes that company’s put in place, to not merely engage risk but also to ensure the correct risks are being identified, monitored, and managed. In Liscouski’s view, the correct risks are those which, if they materialize would produce the most adverse, costly, cascading, and long term effects to a company internally and externally.
But first, Liscouski says, not unlike Mary Adams, it’s essential for today’s risk managers to identify those business processes a company really needs to protect. This begins by thoroughly understanding the linkages and relationships between each business process and the intangible assets embedded in that process
To achieve this company’s should clearly define their business processes so that each contributory intangible asset is distinguishable and its performance (value, materiality, etc.) is subject to being monitored for improvement – enhancement to ultimately provide a more comprehensive risk management environment.