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Visible Costs

Visible costs are direct expenses that can be attributed towards a particular tangible object e.g., cost of a product or a service. Most of these are financial expenses which can be identified and measured. Some of the expenses that are visible are advertising, cost of raw materials, salaries and wages, selling expenses, rent or a software solution for compliance needs, etc.

Invisible Risks

Contrary to visible costs, invisible risks are those that are hidden by nature and not realised, until an unexpected event occurs. These risks are usually the outcomes of a human decision, i.e., a harmful action, or natural events or any such scenarios where intended or unintended harm is caused.
These invisible risks
  • are unpredictable, unquantifiable and seemingly non-evident,
  • cause negative impacts, impair business functions and operations,
  • lead to physical harm and damage, compliance and regulatory violations,
  • bring reputational damage, loss of revenue and material damage.
Hence, invisible risks
  • need to be assessed, evaluated, and planned for
  • managed efficiently to protect from any significant harm.
What are these invisible risks?
  • operational risks,
  • reputational risks,
  • geopolitical risks,
  • cyberattacks and data breaches,
  • regulatory and compliance risks,
  • behavioural risks of individuals like corruption, or insider trading or even terrorist financing
  • natural factors like climate and environmental risks.

“It takes many good deeds to build a good reputation, and only one bad one to lose it.”—Benjamin Franklin

Conclusion

Compliance is usually seen as an additional cost, even considered a burden. It may be prudent to change that perception and see it from a “benefits” perspective of lower moral hazards and lower vulnerability to invisible events and crises. It takes just one person to damage your reputation and trustworthiness. Time, efforts and money spent to recoup that image and trust is perhaps daunting. Invisible risks can cause serious harm and have many material consequences. Think again, if you thought, you planned for all the risks!

How Can We Help?

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Be a responsible financial soldier! Prevention is always better than cure. Protect your brand image & reputation!