By Jim Wetekamp, CEO, Riskonnect, a leading provider of integrated risk management software
As published by Forbes, July 12, 2021
The past year exposed a host of risk management limitations, inefficiencies and blind spots that had been quietly lurking beneath the surface for years.
Organizations that had been content to plod along managing risk the way it’s always been done – often in spreadsheets – were suddenly forced to make important decisions affecting the future of the business with virtually no credible data or insight into what course of action would be best. The experience even shook those organizations that emerged relatively unscathed.
As businesses get back on track, resilience has become the rallying cry. Leaders everywhere are vowing to build back in ways that will make their organizations stronger and more adaptable to changing conditions – but few know how to do it.
Financial Performance Versus Resilience
That’s not surprising, as the market has long favored financial performance over resilience. Boards and executives pursued aggressively financed deals with little thought to the downside risks of a debt-laden balance sheet.
At the same time, internal operations have been laser-focused on delivering more value through optimization. Single-source suppliers for critical parts and just-in-time delivery made operations leaner and less wasteful than ever.
However, every business decision is a trade-off. The quest to become lean sacrificed the cushion needed to absorb shocks. Indeed, the rewards for hyperefficiency were so great, organizations were blind to their growing fragility.
Reorient Toward Resilience
If the past was about optimization, the future will be about resilience.
Surface ripples caused by small market shifts might once have taken years to mature. However, these seemingly insignificant disturbances can now crest into major disruption within months – or even weeks. Organizations have the best chance of adapting to new conditions if they can see rogue waves as they build. As the saying goes, forewarned is forearmed.
If you aren’t getting the information you need when you need it, take a good look at what is supporting your risk management program and rethink what’s in place from the ground up. Here’s where to start:
- Rethink your systems. In the heat of the moment, your perception about what’s happening can easily get distorted – which is a big problem if you don’t have reliable data at the ready to ground your decisions. Time won’t stand still while your team manually aggregates data to create a report. Decisions must be made now. Can you afford the consequences of responding on the fly?
Invest in fact-finding technology so you can go forward with wisdom and intelligence. Look for a solution that will give you real-time access to risk data. Instead of making decisions based on gut instinct, you can have the insight to react quickly to changing conditions while staying true to your objectives.
- Rethink your use of resources. From my experience, I’ve learned that as much as 80% of staff time can be spent managing documents, spreadsheets and emails, and that’s not uncommon if you’re managing risk manually. While your team is busy chasing down numbers, small, undetected problems are left to fester and grow until they eventually are identified in a report that might be produced just once per year. By that time, you’ll have a much bigger problem to deal with. Are you wasting brainpower on something that could be done faster – and better – with technology?
Spend your time and money managing risk, not managing documents. Automate mundane activities like data collection and report building, and reallocate those resources to projects where the human touch adds tangible value to the business. You should have timely, trustworthy data, a more effective risk management program and, quite possibly, a happier team.
- Rethink your data. The business of managing risk generates an abundance of data that goes well beyond the capabilities of humans and their trusty spreadsheets or other old-school systems. Identifying the best course of action, however, depends on your ability to make sense of increasing volumes of data. Without both real-time and historical data at hand, you will be looking at fragments of facts, not at the whole picture. Are you getting the most out of your data?
Consolidating your risk data in one place that’s easily accessible to all who need it can help you harness its power. The right technology can effortlessly tackle data overload, analyze the numbers in real time and pull out the story from even the most complex datasets. One source of truth for the entire organization can facilitate collaboration, minimize conflicting agendas and give you instant access to credible data to make you agile in the face of external forces.
The challenge with all this can be convincing others of the value of integrated risk management technology – and whether that’s enough to justify the not-insignificant investment of time and money to implement a new system.
When determining whether to transition to this technology, consider your current processes and resources and determine whether you could realize any direct cost savings. Also, take time to consider the potential advantages and disadvantages your company could realize in terms of competitiveness when contemplating whether or not to implement a new solution.
The experience of the pandemic put the need for resilient risk management into sharp focus. Although current risk management systems may not be broken in the literal sense, they could cripple organizations going forward. The world has changed, and risk management practices must be adjusted to keep up.
I believe 21st-century resilience requires 21st-century technology to give you the foundation strong enough to allow you to bend without breaking.
This article was originally published by Forbes. Jim Wetekamp is a member of Forbes Technology Council. Learn more about Riskonnect’s Integrated Risk Management solution.