Risk management software and how it saves billions annually
Mark Zuckerberg once said: “The biggest risk is not taking any risk.” Inevitably, taking risks may lead you to achieve your goals and get some benefits. However, it is important in business terms to be skilled in identifying, assessing, and prioritizing risks your enterprise meets daily. Risk management is intended to monitor and minimize the uncertain and undesired events that could lead to business failure.
According to Statista, top risks to global businesses include vulnerabilities in supply chains, cybersecurity issues, natural catastrophes, regulatory compliance concerns, and high competition in financial markets. Among the other risks, we can see fire, climate change, the impact of new technologies, loss of reputation, and shortage of skilled workforce.
Depending on the industry, your business is probably facing risks from various sources, and you certainly have some strategies to manage threats. However, the more you know about risks, the better you manage them. In this article, you will learn how risk management software could save billions annually if appropriately implemented. You will explore what software solutions can be used to handle business threats and how to get the best one for your specific needs.
What is risk management software? ERM meaning
Risk management software helps companies detect, monitor, and avoid risks more effectively than humans could do. Enterprise risk management software, often referred to as ERM, allows to manage various types of risks related to the business landscape. In enterprises, each decision should be transparent and risk-informed.
Leaders of any organization have streams of information that they use to identify risks. For example, leaders of insurance companies get particular information from brokers, agents, similar companies from other countries, news, and some valuable data within their own company. They want to serve their customers effectively. So, ERM is all about identifying risks that can impact a company, deciding on which risks should be actively managed, and then planning how to handle them. Very often, ERM is integrated with operations, budgeting, strategic planning, and performance management systems.
We build software for insurance companies that provides intelligent risk management frameworks.
Traditionally, risk management process consists of multiple stages, which are as follows:
- Risk monitoring
- Risk identification
- Creating a system of analytic indicators of risk level assessment.
- Quantifiable assessment of risk.
- Selecting and realizing relevant risk management methods
- Measuring results
When searching for a proper risk management framework, consider the above-listed stages. The software should have the capabilities for handling all the stages of risk monitoring, management, and prevention.
Features of enterprise risk management software
ERM systems can possess various features, and there two ways to get them. The first way is to buy an out-of-the-box solution with ready-made in-built features that is available in the market. The second – to build a custom product according to your specific business needs, fully customizable, and aligned with your operations. Whether you buy or develop risk assessment software, you should know what possible features it can have. Below are some of them to illustrate what tasks can be tackled.
Strategy and planning
- Detect riskily activities, prioritize risks.
- Define people accountable for appropriate risk management.
- Organize risk mitigation and monitoring in the most efficient way.
Risk assessment
- Indicate relationships between activities and risks.
- Define potential causes and effects.
- Determine possible measures to avoid the risks.
Risk analysis
- Conduct analyses to detect the chance of risk occurrence and its implications.
- Send results for review and approval.
- Enable different risk assessment techniques.
Risk monitoring
- Record events and incidents.
- Categorize risks.
- Analyze data, report risks.
Along with these features, ERP solutions usually provide the following capabilities:
- Dashboards and graphics
- Real-time data monitoring
- Automated monitoring
- Guided workflows
- Data libraries
How to make your software project a success? Verify your ideas with a proof of concept.
How to choose the right product among dozens of risk management solutions?
Many companies struggle to implement the right risk management workflow that will help them avoid uncertainty in the most efficient way possible. The statements below might come in handy for those who are about to purchase or develop an enterprise risk management software:
- The product of your choice is relevant to your specific business risks.
- It has an intuitive interface and is easy to use and customize.
- The solution enables consistent monitoring of events.
- All risks, quantitative and qualitative, are taken into account.
- It allows identifying the root causes and preceding events.
- ERM provides a heat map to predict possible risks before they become real problems.
- It provides sharable dashboards and customizable reports.
- Predictive analytics is integrated to provide predictions for future risks.
- The product is mobile-friendly.
- You will be able to update and upgrade your product if any regulatory changes occur.
These are the main checkpoints to consider when selecting the risk assessment solution for your company. However, professional software developers would recommend you to consider more extensive checklists, which usually consist of both functional and non-functional requirements (NFR). The latter include scalability, security, performance, usability, and many more features that are crucial for proper project planning.
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How can risk management software save billions annually?
While markets are becoming volatile and prices pressing, a global economy drives competitive changes. Risks come closer to opportunities allowing enterprises to succeed faster. According to Deloitte, over 90% of the risk owners surveyed by the agency, consider that risk management will become more critical to reaching organizational goals within the next 5 years. Deloitte’s recent 2019 survey comes down to 4 key findings:
- Companies investing in risk management and understanding the connection between this activity and the achievement of business objectives, usually grow faster.
- Chief risk officers (CROs) across many industries pursue more critical roles in enterprises as risk management has become more strategic activity.
- CROs are expected to be more productive and efficient in managing risks.
- Today, due to the availability of advanced technologies, enterprises have a lot of chances to improve risk management processes without investing much.
Paymon Aliabadi, a CRO at Exelon, in his interview with Deloitte, says that their company is focused on using innovative technologies like AI and RPA to drive automation in risk management processes. Some years ago, they created their risk dashboard with real-time monitoring, which means that accountable for risk management always have the needed data at their fingertips. The company also succeeded in predictive analytics and, consequently, long-term planning. Mr. Aliabadi also stressed that managers should align risk with business and not review it as a separate function. Only then, you could seize and monetize the potential cost savings.
Key advantages of investing in enterprise risk management software
The impact of poor risk management can have a severe impact on any organization. Among the most frequent failures are project delays, overspending, and under budgeting, unhappy customers. What should you do to avoid undesirable consequences? First off, you should acknowledge the importance of ERM as soon as possible. The earlier you understand how critical it is to your business, the sooner you implement the right tools. Below are some of the top benefits of risk management software:
- Realistic expectations
- Efficient decision-making
- Escalation
- Risk-focused culture
Risk management and decision making are interconnected processes that impact organizational success. Any business decision carries some risk. However, if you implement the right technology solution for managing risks, your decision making will be more efficient as it will be based on the real-time data.
A robust ERM solution should also help you with escalating risks from junior management staff to the middle or senior managers. Traditionally, low-level threats can be adequately met and prevented in a short period, whereas risks of higher levels must be treated with more efforts and expertise by senior staff. Thus, the software must provide risk assessment features to make the escalation process automated, easy, and fast.
And be sure, by investing in ERM software, you build a powerful organization with a risk-focused culture. In such a company, risks are discussed and mitigated at all levels. The right ERM solution enables productive conversations around risk. It ensures consistent information to employees responsible for managing risks.
DICEUS expertise in risk management solutions
DICEUS is a market-leading SaaS vendor for custom-designed risk management tools. We help enterprises gain a holistic view of regulatory, financial, and operational risks. By aligning risk with business and understanding the entire risk landscape, our customers can enhance decision making and performance within their company. We are free to consult you on the best risk management capabilities available. Our experts create custom solutions for multiple industries and niches.
