Commercial property – Managing risk

Posted by Auckland Property Management Ltd on October 29, 2018 | Commercial, Company News, News

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By Howard Morley and Anita Menzies
Image from: https://smiconsultancy.com/The-CARVER-Methodology

Managing risk

What is risk?

Simply explained, risk is when you are exposed to certain probability of danger or negativity. It may be damage to an asset, injury to a person, liability due to management, loss of return , or any other negative occurrence that is caused by external or internal vulnerabilities.

It is unavoidable, that as a commercial property investor, you are exposed to a great deal of risk. The probability that an actual return on an investment will be lower than the expected, or; that a tenant, or even ACC can claim against you, come part and parcel with being a commercial property investor.  While you cannot avoid your exposure to this probability of danger or negativity, what you can do is to make sure that management of your commercial property investment has done all it can to manage the exposure, or to say “manage the risk”, which can reduce your risk or even remove the risk.

Developed during World War II, CARVER was originally used by analysts to determine where bomber pilots could most effectively drop their munitions on enemy targets. It’s approach can be both offensive and defensive, meaning it can be used for identifying weaknesses in your opposition, while also auditing your investment internally. The U.S. Department of Homeland Security has recommended it as a preferred assessment methodology.

CARVER stands for:

  • Criticality: how essential an asset or critical system is to your company
  • Accessibility: how hard it would be for an adversary to access or attack the asset
  • Recoverability: how quickly you could recover if something happened to the asset
  • Vulnerability: how well (or not) the asset could withstand an adversary’s attack
  • Effect: how much of an impact there would be across your business if something happened to the asset
  • Recognisability: how likely it is that an adversary would recognize the asset as a valuable target

Important to us, is how this exercise is conducted to identify, categorise, and prioritise risk; to assess vulnerabilities; and to make recommendations around risk. Meaning, once a CARVER assessment has been completed, and material risks and threats have been identified, management professionals can determine the best approach to take. Even the smallest difference in such assessment could influence whether you succeed or not. What we learn from CARVER is the absolute importance in assessing your risk. Without assessment of risk, there is no tailored solution to the given risk. It is this lack of tailored solution that will often lead to difficult situations in commercial property investment.

The reduced risk approach to commercial property investment

APM Commercial is focused on helping commercial property investors like you to assess and reduce this probability of risks that come with investing in commercial property.

We make sure that we identify and mitigate any risks your commercial property might have, keep you on top of an ever changing legal framework, and help you manage a host of involved parties, ensure you meet your financial responsibilities and, help maintain the detailed records expected of you.

Following a similar process to CARVER, we know that actually reducing your risks mean we need to, first; assess your risks and then; tailor solutions focused on your situation and priority.

For example, have you ever considered your commercial property and its outgoings fund?

  • Criticality:how essential is it to have proper account of your properties outgoings?
  • Accessibility:how hard will it be for a tenant to criticise or attack your current outgoings account?
  • Recoverability:how quickly would you recover if a tenant made a claim against you?
  • Vulnerability:how well can your investment business withstand such a claim form a tenant?
  • Effect:how much damage would such a claim cost your investment  business?
  • Recognisability:how likely it is that tenant may recognise your commercial property as a target?

Why we focus on risk?

Our Principal, Howard Morley, is a Past President of the Real Estate Institute of New Zealand, a Registered Valuer, an Associate of the Arbitrators and Mediators Institute. He has been on the Board of two International Real Estate organisations and was chairman of the International Consortium of Real Estate Agents (ICREA). With more than 40 years of real estate industry experience.  All this experience has provided us with an honest understanding and appreciation for investing in commercial property. Our many years in serving commercial property investors have shown us the difference between successful and unsuccessful commercial property investors is that, the unsuccessful investor did not have the required knowledge on how to comprehensively assess their risks.

Our comprehensive approach makes sure to capture the many areas that need to be managed within a commercial property investment in order to eliminate risk.

We see it as our responsibility to help you navigate probabilities of danger and manage your exposure to the dangers we have assessed, or to say “manage your risk”; so that you enjoy a positive return and be truly rewarded in being a commercial property investor.

Let’s remove the risk  with our Commercial Management focused on providing a positive return. Give us a call today on: (09) 638 2500 Or, simply fill in the form below and one of our team will be in touch.

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