Risk assessments are done generally by businesses that need to track risks because it is necessary for their business processes – such as traders and insurers. However, enterprise risk assessment is something that all businesses need to do. Businesses succeed when management makes the right decisions, and management needs to know risks in order to make the right decision. Enterprise risk assessments can help business become more resilient and efficient at warding off problems and beating the competition.
We need to change the way we think about risk if we want to make the right decisions. Many people think of risk as a bad thing. If you tell someone risks associated with an activity, they will think that the activity should not be carried out. This is the wrong way to think because risk isn’t a negative externality that needs to be eliminated – risk is inherently present in everything and it needs to be discovered and managed.
See how you can “Create a Risk Management Plan to Ensure Business Continuity”
What Is Risk Assessment in Enterprises?
Risk assessment in enterprises is the process of discovering, identifying, appraising, and prioritizing the external and internal risks faced by the business. If businesses know the risks they face, they can ensure that their business will not be negatively affected by the risk. Many businesses fail because of a risk in their blind spot. They suddenly face a problem they did not anticipate, and since they did not anticipate it, they were not equipped to deal with it.
Go in more depth with our recent think piece “Bringing Quantitative Risk Analysis to Enterprise Risk Management”.
That is the purpose of risk assessment. We know we should take an umbrella with us if we see that the weather report said rain is expected today. If we do not know about the expected rain, then we will be caught out in the rain with nothing to protect us and our valuables. The same principle applies to risk assessment. There are certain risks which cannot be eliminated and the only way to deal with them is to ensure that you have carried out protective measures to minimize their impact. A good risk assessment will highlight all such problem areas, allowing management to secure the future of the business.
Automating and Streamlining Risk Assessment
Simply assessing risk is not enough for a business to succeed – it is also important to ensure that the employees of the business are risk conscious. Many businesses set out to do risk assessment and they create lots of documents which include details of the risks. The process is appreciated by everyone and the documents are promptly forgotten. The problem isn’t that people want to ignore risk – it is just that for people to take risk seriously it is important to make risks visible. If the information about risks is stored in a document that is sparsely updated, then people will use the document.
Be sure to check our recent post “Five Steps Towards a Better Risk Management Framework”.
What is needed is a system that allows businesses to intelligently manage and assess risks, and that is exactly what enterprise risk management software does. The important thing to understand here is that the assessment itself isn’t automated, but the assessment process is automated. We still need risk officers and risk managers to understand the risks in-depth and evaluate their impact, but we will now be using the information they provide in smarter ways.
Risk management systems allow you to map every risk your business faces. These risks are then made visible to all users of the software. Whenever a risk goes up or down the information is updated in the system which is then automatically shared with all the users of the risk management system. This turns risk into something only mentioned in documents to something the employees can see.
Specialized enterprise risk management solutions that automate and streamline risk assessments come in many different shapes and sizes. There are specialized solutions for particular industries, general purpose solutions, solutions for small businesses, solutions for multinational conglomerates, and so on. If you want to maximize the ROI on the risk management solution you choose then you have to ensure you choose a risk management solution that is the right fit for your company. If you want some help in determining what would be right for your needs, simply get in touch with our team – who will be happy to listen to your risk management needs and tell you solutions that work for your business.
About the Company
360factors, Inc. (Austin, TX) helps companies improve business performance by reducing risk and ensuring compliance. Predict360, its flagship software product, vertically integrates regulations and requirements, policies and procedures management, risks and controls, audit management and inspections, and on-line training and qualifications, in a single cloud-based platform based on artificial intelligence.