With 2020 behind us, many would agree that it was a volatile year for business owners and their stakeholders. COVID-19 was a true test of resilience for many businesses. One thing we learned for certain is the importance of good Risk Management and contingency planning, which you can read about in our recent article: Sketching 2020 from a Risk Management perspective. With the Risk landscape constantly evolving, Risk managers might find it hard to navigate the broad range of interrelated Risk events. If your organisation is still relying on the likes of spreadsheets or a distributed tool approach, the whole process of qualitative and quantitative Risk assessments can be rather confusing and produce misleading, inaccurate results. Today's greatest challenge lies in the astounding speed at which the Risk landscape changes. To successfully manage this, Risk spreadsheets ought to be kept up to date as efficiently as 'humanly' possible in order to appropriately adapt your strategy and processes.
The simple fact is that spreadsheets were not designed to handle the volume and complexity of data that we need to process today, nor does it provide desired results in terms of cost and efficiency. As the broad range of Risk changes regularly, the data represented in your spreadsheets may not be a true reflection of your actual Risk posture at that point in time, and certainly not a few weeks or months later.
This pandemic surfaced the shortcomings of the conventional approach and the speed at which Risks can change. With this, it is inevitable that businesses innovate to stay ahead, such that they do not fall behind their competitors. Keeping this in mind, businesses are now searching for more efficient ways to understand and mitigate their Risks with confidence. In a related trend, Gartner projected worldwide IT spending to increase by 4% in 2021, particularly in the enterprise software space which is predicted to increase by 7.2%. "While there have been unique stressors imposed on all industries as the ongoing pandemic unfolds, the enterprises that were already more digital going into the crisis are doing better and will continue to thrive going into 2021.” said John-David Lovelock, distinguished research vice president at Gartner. The future of Risk Management is clear. Businesses are now turning to automation and deeper, intuitive analytics to improve process efficiency and better identify risks, in order to stay ahead of the game.
A few key reasons why businesses are opting for an innovative, digitalised Risk Management approach:
- It promotes collaboration and aligns the overall business model
When it comes to Risk Management, time and resources are of utmost importance. Digitalised Risk Management processes allow teams to communicate and collaborate far more efficiently, proving them with valuable time back to focus on tasks that generate the greatest business value.
- Improved ability to meet regulatory requirements
For many Risk and Compliance managers, regulatory adjustments mean additional (and fairly tedious) work to their everyday tasks. The new structure leverages technology to articulate requirements more simply, and reveal gaps quickly.
- Reduced Risk exposure from real-time Risk assessments
Risks are dynamic and constantly evolving, as such, real-time Risk evaluations and assessments are key. To help you plan ahead, actual Risk values should be made transparent. This transparency is crucial in allowing you to make informed business decisions and effectively reduce your Risk exposure.
Furthermore, a good Risk Management process should also provide your greater team and stakeholders with a clear understanding of your Risk strategy, appetite, ownership and approach, and also enable you to:
- Define the context of your Risks
Developing a well-defined Control Framework with detailed policies, procedures and guidelines, along with the Risk bearing capacity and appetite.
- Accurately identify Risks through meaningful assessment and centralised data
Use a centralised source of data to identify and assess the threats to your business operations and understand how they affect your business objectives, rather than asking business units to contribute risks that are decentralised, managed across multiple tools and in many ways, based on subjectivity.
- Leverage both qualitative and quantitative methods
Qualitative and quantitative assessments should be able to be performed regularly and timeously, without the reliance on external expertise, or against a generic set of criteria. Methods should be available to you that allow you to calculate your Risks based on their likelihood and impact defined in Risk scenarios and data-driven deviations in maturity. This will allow your team to actively work to reduce Risk exposure to an acceptable level defined in your Risk appetite, and enable you to easily prioritise your mitigation measures based on objective insight.
- Review and report on your Risk posture at any moment, not just on a quarterly basis
There is a great need to be able to view the most accurate state of your Risk posture as you need it, and even better – be able to generate a board-ready reporting on it. Risks in companies develop continuously and rapidly. Hence, the monitoring, evaluation, and reporting should take place continuously, too. With an automated approach, there is no waiting for quarterly reviewing and updating of risks to gain transparency into your organisation's Risk exposure.
More often than not, your organisation has a logical Risk Management process. However, the success factors of good Risk Management lies within the details. In most cases, the details play a significant role, which is something that is often hard to achieve or identify when using a conventional approach.
Download our White Paper to learn about Alyne's six-step approach for End-to-End Risk Management which highlights the details that are often missing from conventional Risk Management methods. Alyne's software involves all relevant stakeholders in the process, promotes collaboration and encompasses everything from Risk Identification to calculating Value at Risk, to provide your team with deeper understanding and better decision-making.
Learn More Here.