Nowadays, risk management in business is a common topic. It is better we do not talk about the obvious topic. Let us discuss something more interesting facts about risk management. Risk management is a vital part of any business that is unavoidable and tough to manage. Let us back up to the facts about risk management in business.
After researching on the internet and from my connections, I was shocked to know these insights. It is interesting to know while planning to start a business.
These research reports were collected by various companies at various times. One of the most interesting reports says that 57% of senior-level executives, consider “risk and compliance” to be one of the two most challenging risks. Among this, approximately 36% of organizations have formal enterprise risk management programs. According to 69% of executives who attended the survey, current risk management policies and practices will not be adequate in the future. This shows the lack of proper and efficient risk management systems or solutions in business to secure their future. That is so sad to know this fact.
Few reports which I referred to states that 62% of organizations experienced a critical risk event during last three years. Critical risk events are most often associated with the following types of consequences (producing large or severe impacts):
- Productivity of employees (62%)
- Efficacy of operations (59%)
- Safety of employees (29%)
- Differentiation in the marketplace (29%)
- Reputation and awareness of a brand (28%).
The market research by top business expert states that global Risk Management market is expected to reach $28.87 Bn by 2027. The report also emphasis that the growth rate of risk management market is growing at a CAGR (Compound Annual Growth Rate) of 18.7% to reach the market size of $28.87 Bn. This research reports shows a drastic scope of growth in rise of risk management methods, tools, and solutions. This is good news for the entrepreneurs who are struggling to mitigate their risk to the minimum with maximized profit and productivity.
From a market research data published on alliedmarketresearch.com, it is seen that the risk management software and solutions have made drastic increase in market than that of risk management services that are manually performed such as consulting, preparing risk profile and risk treatment planning. The report shows that there is a huge rise in the software sector.
From a latest news released by ORX News, the world is spending $14.2 Bn annually just for the operational risk losses. This figure shows that most organizations are affected badly as they find their risk management measures ineffective. This also show how organizations are concerned about the risk management.
While interviewing the top management risk officers, it was interesting to know that 62% of them are looking forward to digitizing the organization’s risk management function, when they were asked what strategy, they will choose to mitigate the risk in their business. Other respondents put forward their opinions such as preparing for systematic risk and low probability, high impact events, reassessing their organization’s tolerance for risk, and taking on aspects of risk mitigation traditionally managed by governments and multilateral organizations.
The strategy and the methodology used by each organization might be different, but it aims to manage risk in every aspect of business. Mostly, these solutions and strategies fails to manage the risk properly due to lack of proper supervision and pro-active controlling. The innovative solutions as I mentioned earlier in this blog, are making the things easier for businesses to manage and mitigate their risks.
The ineffective risk management can invite losses to your business without any indications. The most probable losses arises when one is not having a proper risk management plan in place which leads to penalties. With an ineffective risk management policy, a dissatisfied customer could pick up and go to a competitor, and they are likely to be vocal about it. This may destroy the reputation of the brand and value in the market. The opportunity your business misses is resulting from failure to identify threats and opportunities, negatively impacting company growth.
The perfect solution for this issue is to accelerate the adoption of automation to systematically reduce risk and improve institutional resilience. Get started with an ERM, as it is designed for all stages of the risk management journey. ERMs helps in establishing enterprise-wide effective risk management. This could be helpful for organizations to identify the potential risks at the earliest stage and can prevent it from occurrence. The innovative digital tools give you best and accurate insights at timely manner and help you learn how the risk occurs and what actions could be taken. These tools actively monitor the control plans you implement in your business processes and procedures.
An effective integrated risk management solution can be implemented by any organization, small or large, public, or private. To mitigate financial, strategic, and operational risks, enterprise risk management platforms identify, monitor, and allocate resources. Business owners can prevent losses with ERM (Enterprise Risk Management) software by alerting them about potentially hazardous situations. To prevent unsafe incidents and minimize associated risks, organisations can analyse insights from their ERMs.
Automating risk management allows better visibility into an organization’s overall risk exposure than ever before. Enterprise Risk management software solution is robust, scalable, identifies risks and helps make decisions that anticipate future challenges and opportunities.
In my opinion, technology has grown enough to solve these issues. I think that risk management software and solutions have improved the way they operate. Nowadays, risk management tools are gaining more value in market with the features and offerings they provide for their customers. Most web-based solutions provide a comprehensive risk management capability for their customers. Businesses are not aware of such solutions which can ease their efforts in risk management.
Being a business owner or a risk officer, how well have you planned to mitigate and treat your risks? Your plans might be stronger than any other risk management plans, but without proper insights and control measure and active monitoring, your plans will be handicapped as they carry siloes. Adopting a smarter and efficient ERM tool can save your day in fixing these siloes.
I really look forward to learning from you all on how you are managing risks in your organization.