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Cooperative Risk Management Framework
This proposal is a recommended reference for business cooperation, especially for the first-time cooperation, which helps enterprises prevent risks caused by poor fulfillment capability and credit standing of business partners.
u Frequently Asked Questions
Ø We intend to cooperate with a company based in Beijing, but we know little about the actual status of the company. How could the potential risk be avoided?
Ø We are in cooperation negotiation with a company located in another province. The company only provides us with its business license. Is the company reliable?
Ø How to judge whether the buyer is able to pay in time?
u Risk Management Framework (Sample)
I. Causes of Cooperative Risk
Cooperative risk is caused by deficient consciousness on the potential risk in business cooperation. The causes of cooperative risk can be divided into two types:
A. Objective factors: cooperation is retarded due to external factors such as changes of business environment and state policies or force measures.
B. Subjective factors: one party exaggerates the real strength of the enterprise or makes up false information in order to promote the cooperation.
II. Significance of Risk Prevention
The integrated enterprise risk management system includes risk prevention in advance, risk control in process and crisis intervention afterwards, among which, risk prevention in advance is the first step and also the basis in the risk management system. Risk prevention in advance helps enterprises with the initiative in commercial activities and reduce risks and losses.
III. Countermeasures
A. Due diligence investigation
1. Significance of due diligence investigations
The due diligence investigation is the investigation on the asset and credit standing of an enterprise, which includes the checks on the history, operational state, assets and credit standing of the enterprise. The due diligence investigation helps enterprises avoid blind investment blindness and operational risk, and make an appropriate decision.
2. Basic methods of due diligence investigation
Due diligence investigations should be conducted basing on the actual situation of an enterprise. The basic process and methods for due diligence investigations include:
Ø Investigation on the basic information and history of an enterprise via registered information kept at relevant authorities.
Ø Field investigation of the actual operation status of the enterprise.
Ø Investigation on the reputation and credit standing of the enterprise via interviewing relevant departments and individuals.
Ø Overall evaluation on the operational strength, credit record and development proposal of the enterprise before cooperation .
Due diligence investigations can be conducted by special staff in the enterprise or professional investigation institutes.
B. Other methods
To invite legal experts to work out perfect contract terms is also one of the common methods for cooperative risk prevention. The combination of legal techniques with due diligence investigation is an effective way to prevent risks in business cooperation.
Links
China-foreign Equity Joint Venture Risk Management Report
Other risk management report on business investment
Talking of on the Investment Risk Control via a case
Framework of Risk Management on Post-employment in Commercial Corporation
This risk management proposal is recommended for HR management use, especially for risks caused by the morality of employees, which helps enterprises know about the work state of the employees, including whether they are responsible, whether they break the regulations of the enterprise, or infringe upon the interests of the enterprise.
u Frequently Asked Questions
Ø We doubted that an employee of our company now works as the senior executive of another company in our industry, then how could this situation be verified? And how to prevent the risks brought by the employee?
Ø We found that the product of our business competitor was quite similar with our newly developed product , so we doubted that someone in our company had disclosed our business secret. How could this situation be checked without affecting the normal work of other employees?
Ø We received an anonymous letter which reported that the staff responsible for purchasing asked for rebates from suppliers, how could this matter be verified and how to deal with it appropriately?
u Risk Management Framework (Sample)
I. Causes of Post-employment Risk
The causes of post-employment risk can be divided into two types:
A. Positive risks (moral risk) are caused by the employees’ consciousness to violate the regulations of the company or usurp on the interests of the company.
B. Passive risks are caused by the defective professional quality and low capability of employees.
II. Plans for Positive Risk Management
Compared with passive risks, positive risks have more covertness since conscious maliciousness is involved. So, to prevent positive risks, enterprise should start with recruitment.
A. Risk Control in Recruitment
Ø Check on the background of applicants and the employer of the applicants via relevant authorties.
Ø Verify the post and work performance of the applicants via interviewing the former employers of the applicants.
B. Risk Control in Post-employment
Ø Conduct polygraph test on employee to verify whether he/she has violated prohibitions of business rules.
Ø Quantification analysis on the working performance of employees according to the management record.
Ø Make sure whether the employee suffers moral risk based on the above information and decide about the countermeasures.
III. Plan for Passive Risk Management
Passive risks are mainly caused by defective professional quality and maladroit skills of employees, which could be improved by training and cultural permeation of enterprises to enhance the sense of responsibility of employees.
Links
Risk Management Report on Human Resources in Sino-foreign Equity Joint Venture
Other risk management reports on HR
Talking of the Investment Risk Control via a Case
Management Consultation----Human Resource Management
Risk Management Framework on Cost Control
This risk management plan is recommended for enterprises which encounter risks caused by operational cost increase. This risk management plan proposes corresponding countermeasures on the basis of systemic analysis of the causes for operational cost increase, thus helping enterprises control cost and reduce risks effectively.
Note: This risk management plan is not applicable for HR cost control. Please refer to Risk Management Plan on Post-employment in Commercial Corporation, Risk Management Plan on Job-hopping of Professional Managers, or other risk management reports or academic articles under the column of Management Exchanges
u Frequently Asked Questions
Ø Recently the sales volume of our company increased dramatically, while the total profit amount didn’t rise with price keeping unchanged. Is there any potential risk behind this phenomenon and how to control the risk?
Ø For half a year, the expense for gifts and office suppliers purchasing in our company had increased remarkably, and some suppliers also changed. What’s the reason and how to improve the situation?
u Risk Management Framework (Sample)
Enterprise operational cost soaring in certain period foretells the potential risk in cost management or personnel management. Following measure are recommended for effective detecting and controlling cost risk.
Ø Keep the information of material purchasing and suppliers on file, know about the market condition of material and make sure if there’s any unreasonable purchasing.
Ø Check on the background of purchase staff including whether there is any intimate relationship between the purchase staff and suppliers, keep the information on file.
Ø Interview suppliers and find out if the purchase staff had any behavior which broke the regulation of enterprise.
Ø Examine the production and logistics process and find out if there is any phenomenon of material waste or behaviors which cause the increase of logistics cost.
Ø Keep the marketing promotion activity on record and find out if there’s any illegal marketing behavior.
Ø Analyze above information and make sure if there’s any cost risk and personnel management risk in enterprise, then nail down the corresponding countermeasures.
Ø Seek professional institutes for effective risk management plans.
Links
Risk Management Report on Cost in Logistics Industry
Risk management report on cost in other industries
Risk Management Framework on Job-hopping of Professional Managers
This risk management plan is recommended for enterprises which encounter risks caused by the job-hopping of professional managers.
Please note that the professional managers in this risk management framework refer to not only senior executives of a company such as general manager, vice general manager, but other mid-level managerial personnel, such as department managers or directors.
u Frequently Asked Questions
Ø We detect some signs of job-hopping of the director in our Research Department, there’s also some kind of abnormal for other staff in the department. What’s the risk behind this phenomenon? How to control the risk?
Ø Since the Manager of Marketing Department left our company, we found that one of the business competitor contacting our clients frequently. We doubt that the former marketing manager disclosed the information of our clients. How to get our guess verified and if there’s any countermeasure to prevent the further losses?
u Risk Management Framework (Sample)
I. Manifestations of Job-hopping Risks of Professional Managers
Due to the special position, professional managers usually access to important resources and information of enterprise. Removing of professional managers often brings about risks for enterprise, such as business secret disclosing and breaching of prohibition of business strife, etc. Job-hopping of Professional Managers causes both direct and indirect losses for enterprises.
II. Countermeasures
The most typical risk caused by demission of professional managers is business secret disclosing. The business secret is either disclosed to the business rivals or used by the ex-employee him/herself. Both the loopholes in HR management and business secret protection system contribute to this kind of risk. Following are some countermeasures for risk control:
Ø Talk with professional managers, making sure whether they are going to change job, and the real reason for the job-hopping. Evaluate if there’s any possibility for them remaining in office.
Ø Try to meet the demand of professional managers.
Ø Select backup manager if necessary.
Ø Keep the manager from access to the new technology or product, or transfer the manager to other position.
Ø Keep close attention on the manager after he/she removed and investigate the new employer of the ex-manager. Make sure whether the manager has any behavior such as disclosing the business secret, illicit competition, etc.
Ø Formulate relevant regulations to blackout the contact between the ex-manager and post-employees, preventing the negative affluence of the removed manager.
Ø Work out detailed labor contract to prevent unnecessary labor dispute, collect relevant evidence or adopt legal means to proposal the interests of company.
Ø Seek third party professional institutes for effective risk management plans.
Links
Risk Management Report on Professional Managers in Mainland China
Risk management report on professional managers in various industries
Business Secret Risk Management Report
Risk Management Framework on Work Atmosphere of Post-employees
This risk management plan is recommended for HR management use, which intends to assist enterprises to find out the reasons for existing negative work atmosphere among employees and help managerial personnel eliminate the employees’ negative work mood, lifting employees' morale standards, enhancing enterprises' coherence, thereby improving their work efficiency and preventing risks resulted from employees’ mood, quality and morality.
u Frequently Asked Questions
Ø Our enterprise specializes in vehicle maintenance and repair. Over the past several months, our employees’ enthusiasm for work is always low and the mood of some employees even affects the others’ normal work. How to find the reason for this problem and raise the employees’ enthusiasm?
Ø Our enterprise mainly deals with machine manufacturing. Our employees are low in professional quality and work efficiency but very proud. They always gather to complain about salary, which affects the employee's morale as a work team. How to change the current situation?
Ø In our enterprise, some of the employees form their own groups. These employees disobey their leaders and play against the supervisor, which ruins the coherence in the intermediate managing class and affects the enterprise’s daily operation. How to solve this problem effectively and swiftly?
u Risk Management Framework (Sample)
I. Manifestation of Negative Work Atmosphere
Problems of negative work atmosphere among post-employees exist in enterprises of every industry and are especially popular in labor-intensive enterprises such as manufacturing and sales enterprises. The main manifestations of the problem include:
Ø Some employees have low morale which affects themselves and the others in the work enthusiasm and work efficiency.
Ø Part of employees form their own “benefit group”. They sabotage the unity and relationship among employees and managerial personnel, which leads to the incoherence of the enterprises and fickleness of employees.
Ø A portion of employees intend to quit. They are slothful in their work, even persuade other employees to quit.
Ø Some employees muddle with their work, escape from their responsibilities and influence other employees’ work emotions.
II. Reasons for Negative Work Atmosphere and Risks
Problem of work atmosphere among post-employees is one of risks. The problem is not only a direct result of flaws in HR management but also involves many other complicated factors.
Ø The enterprise is lack of core corporate culture or the existing corporate culture isn’t accepted by employees.
Ø The enterprise is lack of performance evaluation system or the existing one is defective and could not be carried to the full.
Ø Several or even a portion of employees have intentions to quit.
Ø The managerial personnel are lack of management abilities.
III. Solutions
Reasons for negative work atmosphere among post-employees are complex and if not solved in time, it will lead to many other risks. For example, the growth of negative mood among employees, if developing into moral risks, will result in financial disasters or bring about other serious consequences for enterprises. Therefore, how to eliminate negative work atmosphere deserves the attention of managerial personnel of every enterprise.
A. General Measures
Ø Enhance communication with employees, understand their feelings, so that to help them eliminate negative mood and adjust working state.
Ø Foster corporate culture via training, conveying the values the enterprise advocates to employees via various forms to enhance employees’ thinking towards corporate culture.
Ø Perfect the performance evaluation system, strengthen executive force and raise employees’ work initiative through promotions.
Ø Integrate the criterion for the conduct of employees, and enhance the guidance and instruction towards them. Shift or remove the post of those who have seriously damaged the work atmosphere in enterprises
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