There is a divide between the value of achieving peak operational risk management versus the tools made available to operational risk managers. Risk managers typically rely on general-purpose software, such as spreadsheets. While this method is an improvement over the paper-and-pen method from decades ago, it is still largely manual work. While all the calculations are now being done in spreadsheets and the data is being scored in digital documents, the risks are still being managed and monitored 100% manually. This method is more efficient than managing risk on paper, but it severely underutilizes today’s technology.

The case of outdated reports

If you think of a business as a ship, the risk manager will be the sailor sitting in the Crow’s Nest, the tall tower on which sailors are often shown sitting with a monocular, the single eyed variant of a binocular. It was the job of that sailor to keep an eye out for any risks that were getting closer to the ship. The sailor in the outpost would be the first to spot an oncoming storm, rocky seas, islands, shores, and any other danger that lay in the sea.

Now imagine if that sailor, who is responsible for providing information about upcoming risks, was expected to provide all that information but could not go out on the bridge or on top of the Crow’s Nest. The sailor also had no way to see how the weather was now and would only get weather reports after the day was over. The sailor is also not given any monocular or binocular – they can see using their eyes, the same way everyone else can, but they are still responsible for detecting issues before anyone else. They also cannot see the current position and speed of the ship but must ensure that the ship will be able to sail without being in danger.

It sounds impossible, but that is exactly the situation risk managers find themselves in. They work from their desks with little visibility into the horizon. They have no way to view the real-time operational risk of the organization either and yet are expected to predict and detect risks while using the same general-purpose solutions as everyone else within the organization. They do not even have any real-time risk data – they must rely on reports created out of older data and use that old data to somehow manage current and future risks.

What many businesses do not realize is that the risk management domain has now evolved as well and there are many SaaS solutions that can deliver affordable, unparalleled operational risk management solutions. Click To Tweet

How this inefficiency became acceptable

Operational risk management is one of the most important functions of risk management. Businesses want to ensure that their risk management department works efficiently to keep the business safe. Then why do we see such a gap in the technology provided to the risk managers and the importance of risk management? How did it become acceptable to limit the potential or risk managers by not providing them modern risk management technology? The simple answer is that this inefficiency is accepted because businesses do not realize that the latest technology is now within reach.

We live in the era of Software as a Service (SaaS), where we can simply subscribe to solutions like Salesforce, AWS and Azure. Think about how tough it used to be until a few decades ago, when solutions like these had to be implemented on-site at the cost of millions of dollars. Only the largest enterprises could afford the infrastructure, implementation and maintenance of these solutions, but SaaS has made such solutions available for smaller businesses. Something very similar has happened with risk management technology. Businesses know about risk management technology, but they think that it is too expensive for them unless they are a large, nationwide bank or enterprise. No small business can afford to spend millions of dollars on a risk management solution, no matter how committed it is to mitigating risks.

What many businesses do not realize is that the risk management domain has now evolved as well and there are many SaaS solutions that can deliver affordable, unparalleled operational risk management solutions.

Read also: 5 Steps of Risk Management Process

Adding insights to operational risk management

Many businesses look at risk management technology purely in terms of increases in efficiency and productivity. While this is a very important factor and risk management technology does make existing processes exponentially faster and better, this is still a limited view of what risk management technology can deliver. The technology isn’t just for doing what your organization already does but at a faster pace with higher accuracy – it is also to deliver new risk management tools and features. Insights and predictions are the biggest examples of these features.

Modern risk management solutions do not simply centralize all risk information and data – they can also analyze data, which allows these solutions to deliver insights which would otherwise be missed. They can detect problematic trends and let management know that there may be a problem in a risk management process or in one of the departments of the business.

Instead of having to wait for outdated reports, risk managers now have the option to work with real-time internal and external data. This means they not only have access to the latest data, but they can also see how different risk management functions are being carried out throughout the organization. They simply need to access the risk management platform from their own desk to see what they need to see in just a few clicks.

Modern risk management solutions can also predict operational risk. Such systems can detect upcoming risks and let management know if they need to focus on a particular area in the upcoming quarter or financial year.

Read also: Financial Risk Management Software

When visibility, insights and predictions come together, risk managers have the information required make the decisions that are in the best interests of the organization. Instead of having to rely on outdated data to make reports about the previous quarter, risk managers can talk about operational risk management for the next quarter. The best part is that this paradigm shift is possible at very affordable rates, thanks to SaaS and modern technology solution approaches.

Are you looking for ways to improve operational risk management within your organization? Get in touch with our risk management experts to see how Predict360 and Insight360 can help your organization gain increased control and visibility over the risks that affect your business.