Risk in Service Sector

Quality and timeliness with an optimum efficiency levels are the key factors affecting the delivery in service sectors. While this holds true even now, with the insertion of frequent market turmoil affecting the various line of services, many of which are linked to each other have turned the focus lights towards risk related considerations taken by the companies who strive to guard the interests of their existing customers, shareholders and employees on one end and to enhance their brand and goodwill to develop new clients.

The fashion in which Operations Management and Quality Management systems addresses the areas of improvement in the service delivery performance and customer delight, the processes and systems used to control and manage the various forms of risks like operational risks, credit risk, liquidity risk, market risk, IT risk etc., too have gained better momentum. Standards in the areas like information security, business continuity are changing the structure of operations models in the service sector.

Of all the service sectors, one industry which has been in the limelight for quite some time now and in fact, the industry which happens to respond most to this volatility in the market is the financial services industry. Based on the past experiences and future assumptions, it is expected that the financial markets will continue to experience some amount of volatility in the next few years. Even though various regulations like Basel II, Solvency II for insurers, UCITS 3 for Asset Managers and Sarbanes Oxley (SOX) for everything else are being prescribed, events wiping out major financial services giant like Lehman Brothers are promoting new sets of stringent regulations.

While it is very crucial from the risk management perspective to understand the appetite of the company to digest these new regulations and churn out positive outcomes for energising the overall financial system, it is more important to understand the gaps in the existing systems and regulations which resulted in such a large scale financial crises. Thus, finding realistic solutions which precisely lies in the basics of risk management needs to be looked afresh.