Freedom from risks

Conclusion

Safety of information

Information is power. Leverage during negotiations tilts by the amount of information that is available at the hands of the negotiating parties. Business soundness and viability depend on information. Customers’ preferences are established through information feedback and market research. Almost every undertaking depends on adequate and right information to become successful. Information needs to be secured.

With the massive flow of information, its collection, processing, retrieval, and storage have become a technological breakthrough. But with it comes the risk of information breach and data loss. For whatever motive, information hackers and traders are flourishing.

Different kinds of information serve different purposes. Marketing outfits rely on database of names and their contact details for a marketing blitz. Receiving letters offering all sort of goods and services – one can just wonder how individual names of addresses are obtained. A company lent a laptop to an employee who would do a sales presentation but accidentally included a confidential folder containing the payroll list of all its employees. This caused an uproar, specially for the employee, who saw his salary was lower than his peer. The boss had to make emergency salary adjustments, an unscheduled cost.

Safety of property

There are two kinds of property: real and personal. These maybe the smallest and the biggest-sized property, valued at P1 or a billion pesos or more. A key may be small but it serves to keep valuables such as cash and jewelries safe and secured. That is why in many companies there are a whole set of guidelines on Keys Control.

Property can be lost and/or damaged, either by acts of men or by acts of God (meaning natural calamities). Protection varies. Against nature, one may need scientific and engineering means. Or prayer to seek divine means. Against acts of men such as robbery, theft, pilferages, arson, fraud, malicious mischief, sabotage and terrorism, a variety of ways of safeguarding property are available. It may be prudent to insure property to make sure there is cash to replace them.

Safety of product

Remember the recall of Tylenol products years ago? And the recent recall of milk products from China? Also the peanut butter product recall from the supermarket stalls? Product contamination is scary. In addition to the harm it may cause people, unsafe products will damage brand integrity and the manufacturer’s name. Unmanaged product risks can actually close the entire business.

There are also some legal implications that manufacturers need to be aware of. Implied safety of products through wrongful representations in packaging and labeling can cause harm to the general public. Take for example the lack of warning on expiration dates. A food item can be in the shelves for extended periods without the consumer knowing that it is already stale and contaminated.

The government owes it to the people to provide safeguards from unsafe products sales and distribution. The Bureau of Food and Drugs Administration and the Bureau of Product Standards oversee the quality of products being sold to the public. However, manufacturers should also be responsible for making sure their products are safe.

Safety of systems

A company heavily reliant on systems wants a fail safe mode any time during its operations. A utility company wants a 99.99-percent reliability performance ratio. Another targets a zero backlog on service delivery. To achieve these, operational systems must work without fail. For continuity, many companies adopt double back up systems.

If you remember the Y2K event there was a fear of systems breakdown. All companies that relied on computer systems took a broad range of steps to safeguard them. Computer system experts had their heydays and hefty fees to remember. The countdown began. With all back up systems and offsite alternative sites ready for any eventuality, the clock struck at 12 midnight on Dec. 31, 1999. A second after, the world turned to celebrate. The systems were safe.

That feeling of safety in 2000 was a sense of achieving freedom from risk, in a global perspective. The world has since then gone upside down. Again, the cycle continues. Risks are here to stay. The pursuit for safety and freedom from risk lives on.

(Daniel Z. Barlicos is a Senior Manager for Risk Advisory Services of Manabat Sanagustin & Co., CPAs, a member firm of KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.

The views and opinions expressed herein are those of Daniel Z. Barlicos and do not necessarily represent the views and opinions of KPMG in the Philippines. For comments or inquiries, please email [email protected] or [email protected]).