By David Puckett, Implementation Consultant, InterDyn – Artis
In today’s tough economy, effectively managing the many aspects of risk to your company has never been more important. Each and every day, CEOs, CFOs and line managers are faced with ever increasing and costly risks that can suddenly and completely wipe out years of work and dedication.
There are many approaches and tools for managing risk.
Types of Risk:
Risk is generally categorized into five main groups:
- Business risks or those associated with an organization’s particular market or industry.
- Market risks or those associated with changes in market conditions (i.e. prices, interest rates or currency rates)
- Credit risks or those associated with the potential for not receiving payments owed by creditors.
- Operational risks or those associated with internal system failures because of mechanical problems (e.g., machines malfunctioning) or human errors (e.g., poor allocation of resources).
- Legal risks or those associated with the possibility of other parties not meeting their contractual obligations.
In addition, Environmental risks constitute a significant and growing area of risk management. Reports indicate the number and intensity of natural disasters are increasing. For example, the periodical Risk Management reported that there were about five times as many natural disasters in the 1990s as in the 1960s.
(Heil, Karl, “Risk Management: The Evolution of Risk Management”,
As an accounting and financial software package,
Through the use of the many data reporting tools available to Microsoft Dynamics GP users, such as
Some of the more common financial risk ratios that can be generated with Microsoft Dynamics GP include:
- Liquidity ratios – Current ratio, Quick ratio, Cash ratio, Cash Conversion Cycle
- Profitability ratios – Profit Margin, Return on Assets, Return on Equity, Return on Capital Employed
- Debt – Debt ratio, Debt to Equity ratio, Cash Flow to Debt ratio
- Cash Flow- Operating Cash Flow/Sales ratio, Cash Flow Coverage, Free Cash Flow
- Operations – Fixed Asset Turnover, Sales/Revenue per Employee, Operating Cycle
Secondarily, optional modules like
Additionally, Currency risk can be managed for those engaged in international markets through the use of Microsoft Dynamics GP Multicurrency functionality by tracking exchange rate fluctuations and its impact on revenues and profits in foreign markets.
To learn more about the power of Microsoft Dynamics GP and how it can help in your efforts to assess and monitor your risks, contact your
By InterDyn - Artis –