The idea behind risk management practices is to protect your business from vulnerabilities. Risk Management can be used to protect the business from financial risks, as well as reduce risks to employees, customers and the public.
According to the Committee of Sponsoring Organizations of the Treadway Commission, “Enterprise risk management software is a process, affected by an entity’s board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity, and manage risk to be within its risk appetite, to provide reasonable assurance regarding the achievement of entity objectives.”
Some of the biggest barriers to reaching Governance, Compliance and Risk Management (GRC) goals are lack of resources, lack of collaboration, and lack of cooperation. Other barriers include inadequacy of existing technologies, complex technologies, and inability to set priorities. Additionally, it can be that there are too many manual processes, poor leadership and/or lack of organizational maturity.
Companies can employ many different risk aversion strategies to try to meet their goals, but overcoming the functional barriers is the first step.
It’s important to note, that regulatory compliance is often enough of a reason to implement a Risk Management plan due to it being mandated. However, typical board presentations include things like reporting program effectiveness, incident reports, and disciplinary actions taken.
There are more compelling reasons to implement a good risk management program. Things like: lack of effective oversight, organizational silos, wasted resources, unnecessary complexity, and ineffective processes that don’t target the specific risks.
The benefits of having a good system are to protect your reputation, create a more cohesive environment, reduce costs, improve capital allocation and optimize processes.
What appear to be intangible benefits of a good GRC solution, in essence, become very measureable.
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