To optimize their physical assets and to ensure that they deliver the highest ROI, businesses must have a firm grasp on their assets as well as the risks involved. Companies can make bad decisions if they don’t have an adequate understanding of the risks. This can be detrimental to their bottom line. Insufficient process for managing risk and assets can expose companies to regulatory fines or even loss of profits due to insufficient planning.

The management of risk and assets is faced with a number of challenges.

Inadequate awareness of what an organization’s assets are capable of – For example employees might not know that a piece of equipment has the importance of asset management the capability to perform a function beyond its intended range or to operate it at the highest efficiency. This could cause the asset to be underutilized and have an unsatisfactory ROI over its lifetime. This can be reduced by ensuring employees are properly educated about the capabilities of an asset and how to use the asset in a proper manner.

Lack of a robust risk management process – Since the financial crisis, many companies have had little time to think about strategic risk. This has led to suboptimal risk management strategies, incorrect risk assessments and missed opportunities to optimize the assets of an organization.

Third-party risk – From cyber security to integrity of data, and even reputational damage could have huge consequences for an organization. In order to mitigate the risks associated with this type of threat it is essential to have a thorough vendor vetting process should be in place with failsafe protocols in place to ensure all vendors are properly approved.