Risk & relevant managerial information

The necessary developments of management control in companies towards the increase of plans’ execution certainty are imperative for securing the undisturbed, continuous increase of the economic profits. These developments should enable conscious and effective management the impact of risk on the functioning of companies. Disregarding risk in management control may lead to faulty decision-taking concerning running the business, contracts, loss of market opportunities and the lack of hedging the significant risks for the operational activity. The main task of management control is to prepare decisions that may be at risk in the highly volatile business environment. Decision-makers in each company require to obtain timely and reliable information. Managers operate in conditions of ignorance due to risk, which should be managed also by adjusting management control by a risk component. Obtaining correct data about risk and its impact on the economic results becomes the foundation for making effective decisions. However, there is paid insufficient attention in management control practice to issues of risk analysis, risk simulation, planning security or risk adjusted performance measurement. It requires the development of competences supporting the implementation of elements of risk management into everyday management operations. Relevant managerial information should allow decision-makers to take advantage from opportunities and avoid excessive risk exposure. Gathering relevant information on the risk exposure becomes a prerequisite for the future economic success of companies operating in an increasingly unstable business environment. Assuming that management should be defined as wise decision-making in conditions of uncertainty, relevant management interactions based on the managerial information adjusted by risk become a necessary condition for effective management. Hence proper risk management becomes a crucial condition to survive in the market. The companies’ operational activity is closely related to the environment, which is both the main source of risk and the main area in which it can be actively reduced - the economic nature of the market activity is always linked to the acceptance of inevitable volatility. Therefore, risk should be seen more as the measure of deviation from planned values than as an injurious situation, being a consequence of the complexity and randomness of the reality, in which the enterprise operates.