Risk management is a core component in the financial sector which is why almost every business in the sector has a risk management team. However, most businesses do not have a proactive risk management program. There is a general perception that risk management is fueled simply by passion and dedication – that all we need to improve the way risks are managed is to have our risk personnel work hard. One cannot turn a reactive and manual program into a proactive program simply through attitude – we need to automate it too.

Risk management cannot be proactive without technology

Think about what it means to be ‘proactive’ instead of reactive. Most risk management is done reactively, because there is a lot of work involved. There is a lot of administrative work involved too and it often takes more time than the risk management itself. Ensuring that everything is properly documented and stored, sending updates to stakeholders, collaborating on strategies, and other such tasks take hours every single day. The speed and efficiency of most risk management experts is thus greatly diminished by tasks that aren’t risk management but are crucial to manage risks. This increases the workload so much that it becomes almost impossible to manage risks proactively.

Robotic process automation

Another reason technology is such a crucial component is that it allows for automation. All the tasks we mentioned above are either completely or majorly automated in risk management systems – which is necessary if any business wants to be proactive about risks. It is also important to look at the type of tasks which are automated by risk management systems. These systems are not meant to be replacement of risk managers – they augment risk managers. That is why all the tasks that are automated are the ones that make inefficient use of the time of risk officers and managers.

How do they waste time? Simple – risk officers and managers are highly qualified people with specialized training, education, and skills. All these administrative tasks do not use any of their training, education, or skills – that is used when these officers and managers focus on risk management. When they spend many hours doing menial tasks, they are not using their time efficiently, and the organization’s valuable resources are also being wasted.

Proactive risk management programs use technology to introduce robotic process automation which automates repetitive and menial processes. This gives the risk managers and officers ample time to focus on the risk management model. Instead of simply dealing with the barrage of documents and emails and spreadsheets, they can use their training, expertise, and skills to benefit the organization.

Being proactive is now easy

Most businesses are now aiming for a proactive risk management model because it is now attainable. There is a significant amount of technology required to fuel a proactive risk management program. You need the technology to parse documents, store documents, create tasks, monitor risks, collaborate, automate notifications, and so on. It is very expensive to have this technology developed, which is why only the largest businesses in the financial sector could afford such solutions until a few years ago. The advent of cloud risk management solutions, which are ready to use and have minimal implementation costs and requirements, has completely changes this equation. These solutions can now be procured at very low cost and on very convenient pricing plans no matter how small your business happens to be.

As artificial intelligence gets better with time, we will see more and more automation in our risk management programs. We may even reach a point where risk officers only focus on strategies and the big picture, while A.I. based tools take care of everything else related to risk management. If you want to see what risk management technology looks like right now, have a look at the Predict360 Risk Management system.