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The Warsaw Voice » Business » December 1, 2014
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Managing Risk
December 1, 2014   
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Interview with Karolina Koz這wska-Kawycz, Consulting and Risk Management Director at Baker Tilly in Poland.

What is risk management all about?
Taking into account the rapidly changing environment, very demanding legislation, the technological revolution, growing client awareness and the pace of change, I think risk management is the only possible philosophy that allows companies to be competitive. I interpret it as a constant evaluation of internal and external factors that might impact a business. And after digesting these factors—assessing them in a professional and structured way—a considered and appropriate reaction is essential.

Is it as simple as that?
This is easier said than done because detecting and prioritizing risks—in terms of which are really important and which can be skipped—and then finding the best way to deal with these risks is a true challenge.

Does risk management also apply to non-financial institutions?
Every one of us to an extent manages certain private risks every day. If you’ve ever made a list of things to be packed for a vacation or double-checked whether you have all the necessary documents, flight tickets, and credit cards—that’s nothing other than risk management. Generally speaking, everyone and every company manages risks, but this is usually done in a spontaneous way, often in the wake of an unpleasant incident. As the surrounding world becomes more complex, firms, regardless of their size and the industry they are active in, are gradually beginning to think proactively and therefore deciding to implement risk management in their organizations. My personal opinion is that smaller firms do not have capital buffers and are extremely vulnerable to wrong decisions. Therefore they should be even more cautious than the largest companies.

What’s the secret of successful risk management?
Above all, risk management should be well embedded in decision-making processes and operations. It cannot be conducted in an ivory tower where an inner circle of “smart people” analyze something that many others do not understand. Second, the applied methods and risk measures need to be trustworthy and enable a timely response to the identified threats. Third, the response to identified risks needs to be appropriate.

What are the regulatory aspects of risk management in Poland?
Polish regulations regarding financial institutions are comparable to those in other economies and are actually a case of transposing the Basel capital adequacy requirements in banking, the Solvency directive in insurance and the UCITS (Undertakings for Collective Investment in Transferable Securities) directive for investment funds. Additionally, Polish law assumes the general liability of management board members for internal controls. However there are no detailed provisions—unlike for example in the United States (such as the Sarbanes-Oxley Act)—that would encourage firms to apply risk-based internal controls. Companies listed on the Warsaw Stock Exchange implement risk management systems according to the Code of Best Practice for WSE-Listed Companies, under which the Supervisory Board is expected to at least once a year prepare and present to the Ordinary General Meeting a brief assessment of the company’s standing, including an evaluation of the internal control system and the risk management system.

Karolina Koz這wska-Kawycz
E: kkozlowska@bakertilly.pl
M: +48 606 811 800 - www.bakertilly.pl
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