Risk today is interconnected and needs to be understood in context. Consider the Covid-19 pandemic, what started with a health and safety risk has had an interconnected cascading impact on IT security, human resource, third party, fraud, and other risks.
This challenge is even greater when risk management is buried in the depths of departments and silos with no integrated focus across the business. The modern organization needs complete visibility and understanding of risk scattered throughout the business.
Many organizations today find themselves managing risk activities and initiatives through these silos with a myopic, departmentalized lens. Risk management activities are shoved deep into the organization’s back-office departments and functions – ignoring the simple fact that risk management should be everyone’s job throughout the organization. All employees need to understand risk and compliance challenges the organization may face regarding their specific role. Risk exposure is often not in the back-office but the front lines and exists throughout all levels of the organization and its operations. Emerging risks are often interconnected and intertwined throughout the extended enterprise.
This traditional, siloed approach to risk management can often lead to redundancy and confusion. Many things slipping through the cracks, as organizations lack the visibility and understanding of risk holistic impact and connectivity throughout the enterprise. This produces a lower quality of decision-making throughout the organization, while potentially exposing the organization to greater risk in a dynamic and distributed business environment.
A siloed approach to risk and compliance issues completely ignores the intersection and connected nature of risk. It is key for organizations to be aware of this interconnectivity. Specialization in an organization is key, however, when these departments operate discretely and fail to share important information on an emerging risk with the organization holistically the consequences can be severe.
Silos result in workflow overlap, lack of efficiency, and gaps. Organizations encumbered by siloes are bogged down by incompatible policies and inconsistent data. Even when an organization has an integrated risk management (IRM) architecture, many make the mistake of siphoning off that capability solely to a siloed department. An integrated approach means risk is included in broader business and strategic decisions. Risk management should be instilled across the wider corporate culture and risk awareness should be promoted across the entire enterprise and among all employees.
This allows for a more efficient process in assessing risks connected with each employee, region, department, etc. This enables every employee to take part in the risk management process without having to wait for a siloed department to identify and respond to the emerging risk. Assuming that any siloed department is aware of emerging risk and responding appropriately is a gamble no professional should be willing to take.
Organization’s need to increase the efficiency in which they identify and respond to emerging risks and standardize policies, data access, and processes across the organization as a whole. This current lack of efficiency can cost the organization in misallocation of resources from overlap and duplicates that ultimately affect the bottom-line. By allowing for greater data access and better monitoring duties and workflow the organization significantly assists its ability to respond to an event quicker while improving transparency. This to increase agility throughout the entire organizational structure - as well as deliver relevant and contextualized information to important stakeholders in a timelier manner.
Organizations need to have complete holistic visibility and awareness into emerging and potential risks throughout the business. They need to implement an integrated view and management system of operational risks. This is done through a common framework enabled by an integrated risk management (IRM) software platform. This is to be implemented across the entirety of the extended enterprise to bring together departmentalized siloes and increases overall visibility into emerging risks, as well as risk connectivity and potential impact on the business.
An integrated risk management platform delivers greater visibility and access for everyone currently and potentially involved in risk management. An automated and integrated risk management platform allows for an organization to easily spot instances of potential overlaps in workflows so that it can implement common protocols and processes across the organization. An automated, integrated system allows for an instant environment of collaboration, analytics, and reporting.
IRM gives business directors and executives a fine-tuned picture and understanding of all their risks scattered throughout the business. This improves the decision-making process with greater visibility and understanding into the organizations risk profile in the context of organizational operations and processes. On a different side of that same token, integrating risk management gives executives and directors insight into strategic decisions. It also improves the visibility of the interconnectedness of risk and how it could impact objectives and the business as a whole.
A mature IRM program centralizes all the necessary reporting tools and provides dashboards with risk categories for the organization’s employees. The true value of IRM is that it allows the board, executives, and directors to leverage risk visibility and insights from emerging risks throughout the organization for better overall strategic decision-making.