To be successful at proactive risk management, organizations must understand their risks and opportunities, align their business strategy, and harness the power of technology. The following steps can help create a culture of risk awareness within your company. First, you can focus on developing dynamic risk reports based on real-time analytics. You can build a robust operating system that provides comprehensive risk analytics.
Creating a Culture of Risk-Awareness
In a survey conducted by the Harvard Business Review, more than two-thirds of companies said that establishing a proactive risk management culture is the key to business excellence. While it’s certainly not the answer to all business problems, proactive risk management is a proven method to reduce costs, increase shareholder value, and foster a more agile culture. It is best to refer to professionals, such as FTI Consulting, to help launch an effective corporate program to improve risk management. It’s also an excellent way to change mental models and create a more risk-aware culture.
An influential risk management culture should involve the free flow of information throughout the company. Often, the information needed for risk management is buried in one part of the organization. For the culture to be influential, employees must have free access to all risk-related information and the power to escalate any risk to the appropriate corporate management level. Companies are increasingly creating standardized risk management information systems to aggregate data from various business units. It’s also essential to involve all employees in the risk management process.
Creating a Sustainable Operating System
Creating a sustainable operating system with built-in processes for a company’s specific business requires attention to many different aspects of sustainability. The most common barrier is uncertainty. Unfortunately, most companies face a high degree of uncertainty. By paying attention to sustainability, however, this uncertainty can be reduced. Refer to professionals at FTI Consulting, among others, about some of the business’s most critical sustainable practices.
While addressing environmental issues is crucial, it is essential to consider the ecosystem’s health when creating sustainable business models. This approach helps companies determine the level of sustainability and adapt to changing conditions. In addition, an open system allows them to take advantage of benefits, while a sustainable operating system requires a long-term commitment.
Developing Dynamic Reports Based on Real-Time Analytics
The ability to develop dynamic reports based on real-time analytics can be invaluable for the proactive risk management of a company’s supply chain. If a company misses a risk because of insufficient data, the negative momentum may quickly start and compromise the supply chain. This is why a company should consider an integrated solution that collects real-time data and configures it to notify managers of risks in the supply chain across all nodes. In addition to allowing leaders to make informed decisions based on real-time data, these solutions are highly automated and require little expertise on the company’s part.
In addition to creating dynamic reports based on real-time analytics, proactive risk management can also benefit from collecting indicators. We introduce four classes of proactive approaches, representing four levels of connection to the overall risk picture. One example is the risk barometer technique. Another dynamic aggregation methodology is risk barometers.
Organizations need dynamic risk management to make sound decisions. While traditional risk management tools have been in place for a while, most companies lack a holistic view of their risk landscape.