Next Generation Technology and the Future of Risk Management – PCR

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Ryan Swann, Founder of Risk Smart, explains why a proactive approach to risk management is the best way to ensure business resilience; How effective is ongoing data collection; The importance of creating a simple risk management framework and the importance for businesses to keep pace with the expansion of next-generation technology in risk management.

Over the past 18 months, global businesses have faced a host of challenges. Not only have businesses had to deal with the global pandemic, but they have also had to scale up the use of technology to better manage day-to-day internal operations. Coming to terms with a hybrid work model, along with staffing shortages and economic uncertainties, have all helped disrupt a number of industries and as a result, many organizations have embraced innovative technologies to manage change. However, with the increased reliance on next-generation technology, there is also an increase in risks that need to be mitigated.

Risk Management in Global Enterprises
The pandemic has taught business leaders that risk management is hugely important and yet often overlooked. In a investigation of more than 500 board members and CEOs globally, only 40% were satisfied with their management of potential and atypical risks, one of the main obstacles being the lack of internal talent and skills that could better enable the enterprise risk management (ERM) transformation .

Some the biggest risks for global businesses in 2022 include data breaches, climate change and the great resignation – and without having the necessary frameworks, processes or people in place, managing these risks simply cannot be effective. However, by using next-generation technology to implement the right metrics, companies can better capture and report internal data, encouraging the establishment of a clear audit trail. This helps track security vulnerabilities and other potential threats, helping to better understand risk management frameworks and communicate the right information to key decision makers.

Kristina Davispartner of Deloitte Risk and Financial Advisory, observes that “organizations that proactively implement advanced risk management capabilities to keep pace with transformative change have the potential to gain significant competitive advantages.”

Risk management is increasingly becoming a board-level discussion for making strategic and operational decisions. Technological innovations to address industry drivers can be a way to help organizations rethink and restructure their risk management strategies into effective and future-proof risk management programs.

Proactive risk management strategies
In the past, risk management was often about minimizing damage rather than stopping the threat. Implementing a proactive risk management approach allows organizations to avoid potential and existing risks, and allows them to defend against adverse events. Understanding the potential risk and its effects allows businesses to mitigate the impact or ultimately lessen their loss.

Adopting an effective risk identification and management plan reduces an organization’s exposure to potential threats. According to EY Global Board Risk Survey 2021, 71% of risk managers in organizations rated as highly effective at managing risk are using data and technology effectively. The successful use of data and technology to manage operational risk is crucial to differentiating leading organizations.

Automation technology, such as real-time data collection, processing and monitoring, will be able to flag potential threats earlier than possible manually, giving risk professionals time to focus on the threat. assessing the identified threat and stopping it before it reaches its target. . Consequently, 69% of organizations plan to increase their investments in data and technology to improve their risk management processes.

The key to business success
Today, these processes and regulations must be consistent and uniform across the organization. However, the “one size fits all” approach must continually evolve to provide flexibility and adaptation to unique threats and disruptions. The need for an interactive and collaborative process with a robust feedback mechanism is undeniable.

C Ramanathan, Head of Risk and Control at United Spirits LTD, explains that “In today’s disruptive business environment, if managed successfully, strategic alliances create an adaptive ecosystem that is a vital tool to drive technological innovation, thereby reducing volatility and opening up opportunities while optimizing risk.

Undoubtedly, organizations could do a lot more when it comes to risk management, because prevention is better than cure. As the evolution of technology overwhelms organizations, these transformations offer the opportunity to proactively re-examine their risk management processes, while providing a competitive advantage to companies able to anticipate future threats.

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