Earlier this month, the United Nations issued a warning to the world’s business community, saying that economic losses linked to disasters are ‘out of control’, having cost the global economy $2.5 trillion this century alone.
Furthermore, warns the UN, the risk posed to businesses by natural disasters will continue to escalate – unless risk management becomes a core part of most business strategies.
QED Risk Services director, Greg Ashe, says it’s crucial that mortgage and finance brokers get their heads out of the sand when it comes to risk management. He believes it’s not enough for brokers to comply with basic ASIC requirements, because ASIC is focused on protecting the consumer – not brokers’ businesses.
“The obligations of being a licensee are all just smart business management…One of the obligations of being a licensee is sadly overlooked by the entire industry, including the regulator - ASIC is only concerned with ‘harm minimisation to consumers’. But wider risk management looks at your whole business. What are the things that can upset your apple cart in the future?”
Even if you feel relatively safe when it comes to bush fires and floods, Ashe says many brokers forget – or don’t make the time – to put together a basic, more general, risk management strategy. In fact, he argues, natural disasters are just one of the dozens of potential risks brokers face when it comes to doing business.
Ashe recommends auditing your risk management strategy once, or even twice, a year, checking that you have systems in place to cope with everything from health and safety risks to potential negative social media comments.
“It never stops or starts. Prioritise. Identify all of the risks.”
A step-by-step workshop on creating your own risk management plan can be found in the upcoming print edition of Australian Broker.