Risk managers are facing possibly their biggest challenge in these pandemics hit times. Increasing regulatory pressures, complex demand from remote worker management, aligned with previously unseen volumes of data. This perfect storm of circumstances is driven by the complexity and demands of risk management, each with their own unique compliance and regulatory challenges.
Across all sectors, radical transformation is required to address increasing internal and external challenges. The need for creative solutions that offer agility, empower growth and profitability, whilst enabling a comprehensive approach to tackling risk management.
The risk management community are required to identify and address risk and issue challenges, often driven by:
- Environmental and technical Inter-program dependencies
- Internal political pressure
- Cross-organisational initiatives, such as third-party suppliers
- External factors, such as political, economic, social, and legislative
To address the above challenges, Risk Managers need clarity of information, quality, and certainty of data and above all, a 360 view. In addition, they are looking for analytics and insights from the data to support decision-making processes.
Identification typically includes:
- Sources of risk to the business
- Define specific risks and issues
- Identify and create a working risk framework
- Analyse and describe the steps in risk management
- Identify threat and opportunity responses
- Identity and create process flow of information flow
- Identify, create (where required) risk and issue documentation
- Obtain full buy-in and continuous support from the C-Level team
Not uncommonly, identification presents a series of further challenges, mainly from the sheer amount of information available across an organisation. In many circumstances, critical information resides in non-integrated silos across a technology estate. Legacy systems, files in local shared drives and non-protected "shadow systems such as Spreadsheets or databases.
Digital Transformation enables the risk management function to be smarter, more agile, and more strategic
Half of all organisations were unprepared for the COVID-19 pandemic with updated crisis management plans. Many organisations acknowledge a pandemic or similar global crisis risk event was not on their radar of potential threats. With many acknowledging that data resided in multiple sources and needed to be pulled together manually resulting in:
- Critical information missing negating faster or smarter actions?
- None or limited connectivity across systems
- Data, systems, or processes that could have helped confident decisions making were not in place
The first step in transforming risk function is to identify where to improve. Where can improvements be found. What gaps in current mission -critical processes surfaced during the pandemic crisis? The pandemic provided risk professionals with critical, real-life insight into how current processes held up in mission-critical situations.
Wealth of Data
Most sectors rely heavily on access to a very broad range of information. This wealth of information can be of great help for risk management in becoming a more strategic area for organisations. Data such as climate change, social unrest, or legislation, is critical when investing in new business opportunities, such as geographical locations. With this enhanced visibility, the risk manager can play a far greater strategic role in the company, ensuring that adherence to localised compliance rules such as environmental, technical, or logistical, will prevent a loss in the first place.
Corporations now need qualified data to add greater value in better decision making. Risk managers have moved on from simply taking a financial view on risk, they are expected to also support the business goals of their companies in a much more holistic management sense.
And it is here that technology can provide the support and the means to make this happen.
The way forward
Emergent digital technologies are providing huge benefits and support to risk managers facing today's challenges. From integration via application programming interface (API), through to comprehensive use of both structured and unstructured Metadata, enabling intelligent search to extract the full value from data held.
Developing a 360 view of risks, how they interrelate, and the potential impact on the organisation is essential for building resiliency. Consolidation into a fully searchable environment, enabling risk managers and other stakeholders to securely analyse data, share information, and collaborate on business exposure.
Use of Risk Hubs
The frequency and severity of disruptive risk events are undeniably increasing. Risk teams need to have the ability to plan, run scenarios and respond to future events effectively, safe in the knowledge that the data they are using or providing, is as factual and near real-time as possible
The use of portals "Risk Hubs" to securely share data, offers an excellent approach in ensuring the right information is available at the right time. These have the benefit of enabling both internal and external co-operation, along with information updates, real-time exchange, and knowledge share.
Digital transformation of risk management, enhances traditional business model, transforming it into an aligned, collaborative, and interconnected digital environment. By adopting the correct processes, procedures and by using the most appropriate tools, the capability to confidently lead an organisation through a crisis, swings heavily in favour of the risk practitioner.