CORRECT UNDERSTANDING OF RISK MANAGEMENT

The concept of risk is not strange to businesses in particular and those who do business in general. “Doing businesses is taking the risk” became a popular saying of the business people, whether they are owners of large or small businesses.

Although business has to face with risk every day and every hour but risk management is relatively new concept, not many businesses have understanding about it. Therefore, the risk management activities of the business are often being conducted in a half-hearted way. Not many businesses, including large enterprises, have proper risk management departments in their organizational structure. Hence, the uncertainties and crises are usually occurs, causing negative effects and sometimes become disaster for the business.

There are always potential risks in any business environment, whether that environment is developed with clear and transparency rules, or that environment is primitive environment with many confusing and complicated. If the business environment is primitive with inexperienced entrepreneurs, there will be more risks. Risk can be derived from many factors in which the subjective factors may cause risk to occur more with more severe consequences, or vice versa, enterprise can stop the risk or significantly reduce its impact. This depends on the risk management capacity of organizations and businesses.

Risk management is the process of analyzing the environment (inside, outside) to identify, analyze, evaluate, classify, ranking and implementing appropriate solutions to respond to risks to eliminate or minimize the negative impacts that may have. In many cases, risk management includes identifying opportunities within the risk, in order to exploit, take advantage of them and bring benefits to compensate for the damages caused by the risk.

Risk management is different from risk control and risk handling. Risk control is the response activities for the risks that have been identified. Risk handling is dealing with risks and crisis after it has actually occurred. Risk management is the systematic activities, maintaining at every level and assigning to a specialized department.

Properly understand the nature and importance of risk management, business will definitely not hesitate in setting up a professional risk management system. An effective risk management system helps businesses to identify risks early (which are very diverse, extensive and constantly changing), evaluate the possibility to occur and the degree of harm to have effective response measures. Unfortunately, the subjectivity is still the characteristic of many businesses in the risky business environment.

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RISK MANAGEMENT: A VITAL ELEMENT WHEN DOING BUSINESS

Risk management is a vital element when doing business but so far, not many enterprises concern about it.

According to a recent survey with 522 companies, there are only 43 companies, accounting for about 8%, have the independent risk management department in their business. More noteworthy, the majority of these 43 companies operating in the banking and financial sector, which has nothing new to risk management. In fact, not all banks have independent and effective risk management departments. The negative problems related to the banking system in recent times somewhat showed the picture about the risk management of this sector.

Risk is understood as any events and situations that could harmful to the ability to achieve the business objectives of the enterprise. Risk management is organized in a formal way and is conducted continuously to identify, control and report the risks that may affect the achievement of the business objectives of the enterprise.

So why businesses are not interested in risk management? Part of this problem stems from the awareness of the leaders. In order to build and operate the risk management system in the enterprise, it needs the commitment of the senior leaders. If senior leaders do not aware of this problem, the administration process will be difficult to achieve the desired effectiveness.

Recently, there are many theories and systems of risk management but small and medium enterprises should be cautious when apply because system and theory are just general and they should be adjusted when applying to each business.

In order to form the culture of risk management, the leaders must along with the employees to implement it regularly and for each project. In theory, the risk management process is carried out in 5 steps: identify risk; evaluate its impact; determine the likelihood; action and measures; monitoring and evaluation.

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SAIGON CO.OP COOPERATED WITH WILMAR (JAPAN) TO BUILD SAUCE FACTORY

Nam Duong International Food Co., Ltd will implement the project with a total investment capital of 577.2 billion VND (equivalent to 25.6 million USD) to build a new factory in Hiep Phuoc Industrial Zone (Nha Be, Ho Chi Minh City).

Accordingly, Nam Duong International Food Co., Ltd is a joint venture between Saigon Co-op (a large retailer in Vietnam) and Wilmar International Limited (Singapore) with the capital contribution ratio is 49% and 51% respectively.

After the joint venture was established, the preparing procedures for the new factory will be conducted expeditiously. The factory will specialize in manufacturing sauces and spices to serve the domestic and export market.

The brand “Nam Duong” owned by Saigon Co.op, which was founded in 1951, is one of the brands in the sauces and spices industry in Vietnam, with products: soy sauce, sauce, chili and tomato sauce. These products are preferred by domestic and abroad consumers. These products are now being exported to markets such as the US, Canada and Europe.

As the leading retailer in Vietnam, Saigon Co.op understands the trend, tastes and appetites of consumers. On the other hand, Wilmar Group which has extensive experience in manufacturing and distribution of food worldwide. Through this joint venture, the Nam Duong’s sauces and spices products will meet the international production standards and safety and will be sold in a global distribution network but still preserve the traditional flavors in each product.

The main objective in the development strategy of Wilmar is aimed at building and developing closed business models with diverse agricultural commodities, proactive from input raw materials to produce and distribute finished products. Currently, the Group has more than 500 factories in China, India, Indonesia, Indonesia, Vietnam and 50 other countries worldwide. The Group develops based on multinational human resources base with 92,000 employees.

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