A business that gets risk management wrong will struggle to achieve its full potential and deliver on its pre-IPO promises.
The global financial shocks over the past few years have encouraged investors, regulators and other stakeholders to look far more closely at how effectively public companies manage risk.
A company making the transition from private to public needs to be doubly sure that it understands its changing risk profile once the IPO process is complete.
In the current environment, the markets will not look kindly on surprise announcements. Investors are likely to sell first and ask questions later, and regulators will direct greater attention to companies that cannot provide accurate information on demand.
Better risk management is better management
An effective approach to risk management has to strike the right balance between risk and opportunity. Companies need the flexibility to act quickly and take risks when profitable opportunities are identified, but they need to do so in a controlled way and within pre-established risk parameters.
Every business is different, so every company must determine the right mix at the highest level and communicate its thinking across the business.
Get this wrong and the business will struggle to achieve its full potential and deliver on its pre-IPO promises. Get it right and the business will accelerate its journey to market leadership, safe in the knowledge that it has an informed understanding of the risks and the opportunities that it may encounter along the way.
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