On one hand, the recent downturn in global markets due to the Coronavirus outbreak has resulted in businesses facing budget shortfalls. On the other hand, importance of risk management has only increased due to economic instability across the world. This has resulted in a conundrum for risk managers – improve the efficiency and effectiveness of risk management while tightly managing costs.

Optimizing risk management may seem like an arduous challenge during economic downturns, but it is achievable with the help of modern technologies. The traditional method of increasing productivity of the risk management department has been to increase the headcount in the department. This obvious solution has proven results, but the problem is that it results in a major increase in expenses. Risk managers are specialists in a niche field and are in high demand these days. Both these factors increase payroll expenses. Hiring more people adds a lot more cost beside payroll expenses as well – businesses must pay for a bigger office to house more employees, pay for insurance, get new equipment for the expanding workforce and so on. This approach is unsustainable when businesses are dealing with shrinking budgets and cost cutting.

There is, however, another approach that banks and businesses can take to manage their risks more efficiently while lowering risk management costs – risk management technology.

Businesses need to decrease costs but also improve the way they manage risk. Risk technology is the only viable solution to do both at the same time Click To Tweet

The exponential productivity increase made possible by technology

An exponential increase in productivity and efficiency combined with lower operational costs may first seem improbable, but it has been proven to be possible with technology again and again. Look at how email technology changed the way offices operate. Emails brought down the cost of communication to negligible amounts when you compare it to writing physical letters and distributing them. It also eliminated the inefficiencies to the point where documents that took weeks to be delivered can now be delivered instantly.

We have seen a similar boost in productivity with other technological advents. The financial sector quickly implemented digital systems five decades ago because spreadsheet software decreased costs while exponentially increasing productivity.

Risk management technology promises to do the same for risk departments across the world.

How risk technology delivers improved performance and risk optimization

A closer look at the way risk technology works makes its benefits clear. Risk management technology can boost productivity and efficiency while decreasing costs because it smartly automates time sinks in the risk management process. Research has shown that most risk managers only spend a quarter of their labor hours on managing risks. The rest is spent on administrative tasks. The problem is that these administrative tasks are crucial for managing risks, which is why the risk managers cannot skip them.

Risk management technology completely automates or streamlines these activities. A lot of time is spent by risk managers collecting reports from different departments, extracting the relevant information, analyzing it, and so on. These tasks, which can take many days to complete, can be quickly done with an automated risk management solution.

That isn’t the only advantage of risk management technology – it doesn’t just make the existing processes faster; it also enables new features made possible by technology. Risk management solutions can provide risk predictions based on real-time data, allowing businesses to immediately detect problems and proactively mitigate them. This is impossible when risks are being managed without risk technology. Risk management technology also enables organization-wide risk visibility. The executive branch and risk managers have a real-time view of the risks affecting every department of the organization and can intervene wherever needed.

When you combine these two types of improvements – a significant increase in the productivity and speed of existing risk management processes and the introduction of new risk management features and possibilities – it becomes easy to see how these solutions can improve risk management.

Lowering Costs

The increase in efficiency of risk management also results in major cost savings. These cost savings are made possible due to the exponential increase in productivity. Instead of increasing headcount in the risk department, banks and other organizations can implement risk management technology. Cloud risk management solutions like Predict360 are available at very attractive monthly subscriptions which can easily be afforded by small and medium businesses.

Want to see how a cloud risk solution will perform in your organization? Get in touch with our risk experts for a demo of Predict360.