For companies to optimize their physical assets and make them return the most it is essential to have a an understanding of both their assets and the risks they pose. Without a strong knowledge of the risks businesses can make rash choices that will ultimately hurt their bottom line. A lack of a comprehensive process for managing risk and assets can leave organizations vulnerable to regulatory fines and loss of profits due to insufficient planning.

The management of risk and assets is confronted with a variety of challenges.

Unawareness of what the organization’s assets are capable of For instance, employees might be unaware that a certain piece of equipment is able to perform a function that is beyond its original scope or to operate it at maximum efficiency. This can lead the asset to be inefficient and suffer an unsatisfactory ROI over the course of its life. This can be reduced by ensuring that employees have proper training to understand the capabilities of an asset and how to utilize it properly.

Lack of a robust risk management procedures – Ever since the financial crisis, a lot of companies have had little time to think about strategic risk. This has led to poor risk management practices, inaccurate risk assessments, and missed opportunities to optimize the company’s assets.

Third-party Risks ranging from cyber-security to integrity of data and reputational damage can have significant consequences for an organization. To mitigate the risk of this kind, a robust process for vetting vendors should be in place with failsafe protocols in place to ensure all vendors are properly vetted.