A lot of business leaders often focus on generating more revenue for their organizations and opportunities for growth but do not focus enough on limiting and managing their risks, which is slowly changing over time. Companies cannot afford to have a margin for error, especially when there are other stakeholders involved because it could lead to great financial losses for their organization.
An automation platform to manage risks can facilitate growth and eliminate human error. It can help with making better credit decisions, simplifying tasks, and improving the company’s financial performance.
Benefits of Automating Risk Management
Efficient Assessment of Credit Risk
It has been established that risk management helps increase the profits of any company. A really big part of this statement is that companies need to be able to evaluate their credit risks. By automating the risk management process, companies can easily check the credit of all potential partnerships and buyers, which can help them decide whether they pose as credit risks. Automating risk management also helps with constant monitoring to see if there are any new emerging risks.
Elimination of Manual Tasks and Human Error
There is an abundant amount of events that take place in any organization, regardless of their industry, generating data that is important to the company. Managing and assessing this data manually can seem like an insurmountable task and also leave room for a lot of human error. This can be eliminated by automating the risk management process. An automated risk management platform can collect, organize, categorize, and upload all incoming data with ease and accuracy. It also helps with searching for any similar incidents that could have occurred in the past to check for responses.
By eliminating manual tasks, risk managers can focus more on risk prevention and mitigation. Automation also speeds up the entire risk management process by reporting incidents faster and uploading all new data instantly.
Return on Investment
Many traditional companies can be hesitant to shift to an automated process for risk management because they believe that it requires a significant investment. A recent Forrester study conducted showed that there was a 361% rise in the total ROI that was derived by automating their risk management processes.
One of the biggest reasons for this is that if companies deploy an automated risk management system, they can easily forecast trends and report them, making the implementation of risk mitigation strategies simpler and faster. This helps companies act proactively instead of reactively to risks, which can save a lot of money for the organization.
Improved Analysis and Reporting
Automating the risk management process helps companies get more accurate and accessible data for their operations. This improves the risk analysis and reporting process, critical to risk management. An automated risk management solution helps with trend forecasting to predict potential risks, analyze the causes of certain risks, and cost them, among many other features.
All incoming data gets simplified with the automation of risk management so that risk managers can have accurate and updated data whenever they need so that they can report risks as soon as they arise and implement strategies to manage them.
Better Service
Automated risk management helps employees handle risk more effectively and work with a higher level of safety, which directly impacts the service they provide to their stakeholders positively. This improves the relationship the organization has with all its stakeholders and keeps them happy. Companies can maintain their reputation and stay ahead of their competitors by giving their customers the best service.
Best Practices of Automating Risk Management
Risk Scoring to Prioritize Risks
Automation of risk management helps with scoring risks and prioritizing them based on the impact and the likelihood of their occurrence. This improves all risk mitigation activities because companies know which risks pose the biggest threat to their operations and manage them.
Some factors that go into prioritizing risks are how it affects the confidentiality and integrity of the specific asset it is affecting, how many systems are dependent on this asset, whether or not there are already controls in place to manage the potential risks.
Simply using CVSS Base scores to determine the severity of risks is an effective enough approach. They can lead to incorrect prioritization, which will then lead to mismanagement of risk. This is why automating risk management is important. An automated risk management system will consider all possible factors and outcomes before prioritizing any risk. By 2022, according to a recent study by Gartner, the companies that use a risk management process will suffer 80% fewer breaches.
Read this blog and uncover the 5 steps of risk management processes to avoid any potenial risks!
Transparency into results
An automated risk management system creates transparency in all the operations and processes within the company. This creates accountability in the employees, and risk managers can easily observe and view and open risks or KPIs. An automated risk management platform makes it easier for risk owners to send out notifications, reminders, or escalations whenever necessary.
It becomes easy to track metrics such as the time taken for remediation, compliance, and more. The notifications and reminders keep the management and risk owners in the loop to ensure the risks get the required attention.
System to accommodate growth and scalability
Ideally, all businesses and operations will continue to grow over time. This means all systems that are being used by the company need to be scalable. If companies employ an automated risk management platform that cannot accommodate growth, it will lead to inaccuracy and inefficiency when it comes to managing risks, resulting in financial losses for the company. Changing the risk management platform every time the company scales up or down can become expensive. That is why adopting a risk management solution that is scalable and can accommodate the enterprise’s growth is a best practice all companies should follow.
Training
All organizations need to have employees who are thoroughly trained and have expert knowledge of the company’s risk management platform. Automated risk management is of no use if the risk owners and team members do not know how to use it to its full potential. Using various training programs and certifications to train all employees in risk management and the software properly is crucial to ensure the effective deployment of any risk management software.
Some of the popular Risk Management courses that professionals can take up are:
