Regardless of your organisation’s size, being in business means facing and taking risks. As a CFO or business leader, you have a lot of authority on deciding the risks that should be prioritised. Risks can be calculated and expected like financial risks, or they can come totally out of the blue, like a natural disaster. No matter the type of risk, risk management software can assist in predicting, analysing and hopefully mitigating risk.
What is Risk Management?
To put it, risk management is the process of identifying, assessing and controlling risks that an organisation faces. Risk management benefits business because it can help to save money and time. It also can protect a business from damaging its reputation or breaking regulatory rules.
To first discover the types of risk that face your business, it’s best practice to construct a risk assessment matrix. From there, you can find out what types of risk are the biggest priority to consider and how to manage them. Then, you can use risk management software to detect, monitor and help control risk.
What is Risk Management Software?
Risk management software relies on data to locate where risks exist. You can configure risk management software to prepare a dashboard that continuously monitors different divisions of your business. When there is a threat like a data breach or sales slumping, the software will alert you. It may also even propose remedies. Risk management software does not work alone, however. It takes responsible people to use the software and consider its messages properly. Then, decision-making and next steps can happen.
Key Risks for Businesses
In all businesses, there are different types of risks. There is a list of common risks that face nearly every kind of industry. These include:
Interest Rate Risks: When the interest rate changes, the cost of your capital does, too. Therefore, interest rates can harm or benefit your business.
Legal Risks: This concerns how new regulations can affect your business and the risk of incurring expenses at the hands of a legal dispute.
Cyber Risks: When it comes to the internet and data, cybersecurity poses a significant threat to businesses. The security and protection of data are of utmost importance to a company and its consumers.
Operational Risks: If a day-to-day operation is threatened, such as the internet going down or a power outage, the day’s business, and in turn, revenue is affected. These sometimes uncontrollable risks can take their toll on a company. But, they can also be mitigated with proper planning.
Uncertainty in Financial Markets: Changes in the economy and trade affects businesses. Political uncertainty can contribute to this type of risk.
Governance and Compliance Risk: The government has strict regulations for all businesses, especially when it comes to travel, finance and more. As such, companies must comply or often face costly consequences.
Natural Disasters, Accidents and Wars: Perhaps the most uncertain type of risk comes from natural disasters, accidents and wars. These can happen at any time and, of course, have massive detrimental effects on both businesses and communities.
Benefits of Risk Management Software
Risk management software offers many benefits to CFOs internally and externally. The adage goes, “if it can’t be measured, then it can’t be managed.” This is true of operations, of course, and equally of risk. Let’s take a look at some of the outstanding benefits of using risk management software.
Increased Shareholder Value: When a company appropriately manages risk, it is well-trusted and boosts its reputation. With a better reputation, stock prices can grow, and in turn, shareholder value follows suit.
Internal Control: Risk management software helps business leaders oversee their company from all angles. This means that better decisions can be made and there’s more control over operations.
Reduced Compliance and Legal Costs: One of the most apparent benefits of managing risk is saving money. If you know you are correctly adhering to rules, then you inherently decrease the risk of legal disputes and regulatory fines.
Efficient Operations: Managing risks entails deploying resources to address them. Knowing about risks allows operations to flow more smoothly and resource to be allocated based on need.
More Transparency: With software, all relevant parties can be in tune with operations. There is more transparency with business operations, and managers can make informed decisions.
Upgraded Security: In general, having risk management software will increase your security. Since the software comes with regular updates, you can rest assured knowing that the system will take care of itself.
How to Choose the Right Software
When considering risk management software, there are many different options. They span free to paid or made for small business to enterprise solutions, to name a few considerations. But, firstly, these are the types of features you’ll want to consider having:
Relevant to your business needs
Real-time risk notifications
Provides added value
Easily updatable to adhere to new compliance rules
Can it host documentation
Forward-thinking to avoid the risk
Bank-grade security (keeps your data secure)
Open-Source and Free Solutions
If you’re looking for free software solutions, try your hand at these:
Eramba: Some of Eramba’s key features include: policy management and the ability to manage controls and audits. If you want more features, you can pay for the enterprise solution.
IntelligenceBank GRC: Designed for the finance industry, IntelligenceBank makes it easy to streamline risk and governance processes.
SimpleRisk: SimpleRisk provides a basic option for free risk management software. For any upgrades, it will cost money. But at the basic level, you can plan mitigations and run reports.
SolveXia: SolveXia is a human analytical automation software system that can help you manage your business’ operations effectively, and in turn, reduce compliance risk. Its features made it an excellent risk management software, with its audit trails, data governance and ensured compliance make it an ideal risk management tool. The best part is this software goes beyond risk management and extends to data analytics, modelling and trend analysis, and integrates with all existing data and legacy systems.
NetSuite: Oracle’s NetSuite is a cloud ERP that can work for any business size and industry. It includes risk management tools.
NAVEX: NAVEX offers audit management, operational risk management, vendor risk management and more. The system can be tailored to your industry and business needs.
It’s clear how and why risk management software is a good idea for your business. However, some challenges come with implementation. For starters, you’ll want buy-in and support from internal and external stakeholders to make the software worthwhile. Additionally, you need to ensure that your current toolstack and data is not siloed. Tools like SolveXia can help you manage your processes and automatically pull data and information from various places. Once you have all your data connected, it’s easier to manage risk and deploy risk management software.
Remember, risk management software does not work alone. It requires human resources to monitor and act on the information the software presents. It also requires that the CFO and leadership team keeps everyone aligned with business goals and processes. When you put risk management in place and have procedures ready, it can naturally help your business prosper.