In this era, every firm has their own complete database about who works for them and even who their consumer is. They also have strict rules on how to do the job properly. There is no way that any outsider can freely become their employees or consumer without any background checking.
But, do you believe that there was someone that could impersonate as a pilot in a corporation as big as Pan Am without any licence for driving an airplane and actually drive the airplane? Or do you believe that he is also the same person that forge checks worth millions of dollars? All those events once happened in 1963 to 1969 by someone named Frank William Abagnale Jr. who is known as Pan Am’s Great Impostor. His story then brought to the big screen in a biographical crime film called Catch Me If You Can with the actor who played Frank Abagnale is none other than Leonardo Di Caprio.
The Frank Abagnale case has teached a valuable lesson to the world of how important risk management is. Risk management is a core leadership approach that ensures any potential threats to success are identified and dealt with before they derail your project. The lack of risk management in a company’s system is the root cause of many companies losing millions of dollars. It is also the root cause of how $2.5 millions can easily be stolen by a 21 years-old man. In the past few years, many companies have been developing their risk management system in order to dodge another Frank Abagnale case that could happen. Supported by the advancement of technology, companies are enhancing their data analytics to prevent and overcome risks.
There are many benefits that will occur when a company’s risk management can assess many kinds of risk. By identifying the risk earlier, it’s easier to spot a project in trouble and increasing the awareness of potential problems. There’s also a better quality data for decision making and thus increasing the communication in the team. When a company is actively tracked and managed, they can be more focussed on the critical outcome of their work and more accurately estimating the contingency budget. Therefore, an achievable and measured expectation of success can be set and achieved.
There are many risk management frameworks that can be used to identify and prevent risks. One of the most common risk management frameworks that are used include the COSO Enterprise Risk Management Framework. The framework was initially made with four categories which were Strategic, Operations, Reporting, Compliance.
However these four categories were later revised as the framework was not enough to implement an enterprise-wide risk management framework since its main focus was put on what could be audited instead of identifying threats beforehand, which is what an enterprise risk management is supposed to do. The revised framework is more focused on risk culture, risk appetite, and the integration of risk management throughout an organization. The new COSO ERM framework has five components, which are: Governance and Culture, Strategy & Objective-Setting, Performance, Review and Revision, and Information, Communication, and Reporting.