Organizational risk is a broad concept that can encompass a variety of concerns, such as ensuring employee safety, improving company data security, preventing financial fraud, and complying with statutory regulations. Risks may be internal to a company, like equipment or software malfunctions, or external, like sociopolitical unrest or natural disasters. What phenomena are considered sources of risk, as well as how urgently these need to be addressed, will vary between individual companies.
Every successful organization, no matter the industry, must actively prepare for different kinds of organizational risk. These days, risk management software forms the backbone of enterprise risk management (ERM) frameworks for many modern companies. This software is designed to help organizations mitigate potential sources of harm to their business, protect their assets and resources, and maximize opportunities to improve business performance.
Given the above expectations, the best risk management solutions are unified, coordinated, always functioning, and well-aligned with the company’s operations and business goals. Unfortunately, some companies hesitate to let go of their legacy software for many reasons, such as large upfront costs as well as the time and effort required to complete the switch. Still, the pros of upgrading to a more modern solution far outweigh the perceived cons. The following are among the most compelling reasons your organization should consider investing in good risk management software:
Ensures Your Organization Is “Always On”
Digital risk management programs take full advantage of the numerous characteristics and benefits cloud-based software naturally delivers. These software solutions are fast and efficient to deploy, always-on, and fully secure. Permanently active, highly functional risk management infrastructure is a must for keeping companies up and running in the event of system downtime, internal or external business disruptions, and other adverse occurrences.
Furthermore, with cloud-based software, developing efficient ERM frameworks that are well-tailored to your company’s needs and goals need not be a resource-intensive, multiyear project. Cloud-based ERM solutions can be customized and deployed much faster than legacy systems—even as quickly as within a few days, in many cases. Your company will be able to set up efficiently and start reaping the benefits of your new system right out of the gate.
Enables Better Decision–Making Across Various Departments
Good risk management software can help your company structure, improve, and standardize its protocols for reporting on and analyzing risks. Standardized risk reporting practices can provide company leaders with the business data they need to make intelligent risk mitigation decisions. Having up-to-date information on new or emerging risks, key risk indicators, and viable mitigation strategies also helps leadership identify the most urgent risk area.
Automated and standardized risk reporting assures you of flexible, concise, and accurate data delivered in a timely fashion. You’ll be able to disseminate any data necessary for effective decision-making at any level within the enterprise, rather than just at the executive and director levels. Better data access will, in turn, enable greater synergy and collaboration between key business units by allowing them to share information efficiently and to view that information in a clear, consolidated format.
Allows for More Efficient Use of Company Resources
Companies that depend upon older risk management frameworks may spread the work of managing and reporting risks across many different individuals and operational units. This practice can lead to redundant processes, fragmented risk information, and sometimes even unnecessary expenditures of time and resources.
Modern risk management technology can eliminate these redundancies and pave the way for a more integrated, enterprise-wide approach to ERM. The software can easily extract detailed and reliable risk data from multiple sources, consolidate this data, and make it viewable to anyone who needs it. These capabilities allow your company employees to spend less time on data reconciliation and verification and more time on developing meaningful risk analyses and mitigation strategies.
Improves Business Continuity and Resilience
Many businesses operate today in an environment fraught with conflict and prone to rapid change. These companies regularly weather a range of challenges, including financial unpredictability, supply chain deficiencies, evolving regulatory and client demands, and more. Given these conditions, the need for appropriately flexible, agile, and data-driven ERM systems is more urgent than ever.
Contemporary ERM solutions don’t just allow companies to contend in real-time with changing business conditions and prevent potential harms to their organization. They also give business leaders the insight and flexibility to turn these risks into opportunities. For example, organizations can use ERM solutions to identify potential threats, model scenarios for mitigating those threats and drive business-wide operational transformation. This ensures that, if these potential threats are realized, the company will be able to continue delivering on its obligations to its customers, employees, and suppliers.
Fosters a More Risk-Intelligent Culture
A siloed approach to risk management, in which ERM procedures are isolated as the particular responsibility of one person or group, will fail to reach and impact key stakeholders. In these cases, risk management is likely to become a rote procedure lacking meaningful collaboration, impact, and systemic applications—all of which are necessary for your business to thrive.
ERM programs and technology are most effective when they’ve applied across, and involve the participation of, the entire enterprise. Integrating risk management processes with performance management, finance, treasury, and other essential operations helps build a more risk-intelligent culture across your company as a whole.
At the end of the day, there are endless ways that innovative and up-to-date technology can help companies practice more intelligent risk-related decision-making. With the support of robust data and a solid technological foundation, your company will be better equipped to maintain its operations and meet its goals, regardless of what risks it faces.