Risk managers need to be resourceful if they want to succeed in identifying, assessing, mitigating, and optimizing enterprise risks. They need to be resourceful because, while their work is critical to the functioning of the business, they usually do not have any specialized tools to help them manage or analyze risks. They end up using word processing and spreadsheet software to manually store risk data and analysis. This is, unsurprisingly, not a very efficient process.

The changing nature of risks

The unpredictable nature of the risks that businesses must now face has made managers realize that they need better tools to keep up with emerging risks. The risks of today are not like the risks that businesses had to contend with until a few decades ago. The advent of the information technology age has supercharged the pace of commerce across the world. Communication that used to take weeks can now be done in an instant. The business world of today is faster than it has ever been in human history and is also more spread out than ever before. Businesses across the world are linked together in a way that simply wasn’t possible before.

Fast paced businesses connected globally have been a positive influence on the world, but this mode of business carries a large risk as well; the business risks develop and spread at the same pace as commerce itself. Until a few decades ago if there was a major risk in one region, it would take some time for its effects to reach other regions, which gave businesses time to react. That buffer, which allowed businesses to take their time in analyzing and assessing risks, no longer exists. If a risk emerges on the other side of the world, it may reach your business instantly.

The old process consisted of risk managers manually monitoring emerging risks, then manually assessing risks using manual calculations, and then creating a report based on their assessments. This process is too slow to deal with the types of risks businesses deal with these days, which is why risk managers need modern tools that can keep up with modern risks.

The dynamic risks of today spread faster across the business world than ever before because information technology has connected the globe. We need modern risk analysis tools to keep up with them. Click To Tweet

How risk analysis tools are helping businesses

Risk analysis tools automate the menial parts of the risk assessment process, thereby allowing risk managers to analyze risks at speeds faster than it was possible before. Think of all the steps that need to be taken for a risk to be analyzed. All the relevant risk data must first be extracted from multiple sources. The risk manager has to locate all the documents and spreadsheets with the data that they need. The data will be stored in multiple formats and standards across different files, to analyze them the risk manager will first need to extract all the useful data and then standardize it so it can be analyzed.

The risk managers must then enter this data into a spreadsheet and write the formulas and macros which will help them analyze the risk. Note that the risk manager still has not started to analyze the risk – these are just the steps which are required to start the risk analysis. More time is spent on these activities than on the actual analysis itself. It is also ironic that while computers are doing most of the actual analysis calculations, the risk manager ends up spending much more time on the work than any computer does.

Risk analysis tools allow risk managers to skip this process. They standardize the way that risk data is stored, which means that the risk data is always ready for analysis. The analysis itself is also done using tools already present within the risk analysis tool, which means the risk manager does not have to spend hours on creating a spreadsheet. Instead, they click a few buttons in the risk analysis tool and get back the results. A process which used to take multiple days can now be completed in just a few minutes.

The effects of this are profound for risk management across the organization. Since risk analysis becomes much simpler, businesses can analyze more risks more often and get an accurate and updated view of the risks affecting their business. The quick analysis also enables them to focus on real-time risk data, which is simply not possible without using a specialized tool to analyze risks. These tools have quickly taken the financial sector by storm because of the fantastic ROI that they deliver.

Wondering how a risk analysis tool will help you analyze the risks that affect your business? Get in touch with our risk experts and we would love to show you a demo of Insight360, our risk analysis tool that delivers real-time risk insights and predictions.