In a fast paced and ever changing Australian landscape, emerging risks are affecting organisations more than ever before. Businesses need to be on top of risk, with a risk management framework that is embraced from the Board to the shop floor
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An inclusive approach to managing risk can help create sustainable growth. It can also help executives achieve their business goals, enhance innovation, build credibility and achieve business resilience.
To achieve this, organisations need to redefine their approach to risk – and evolve the way risks are managed from ‘reactive’ to ‘be proactive’. Risk relativeness needs to be considered. Leveraging technology and data to align and bring risk to the front line decision-making processes is essential.
From the corporate culture to governance, technology to data insights, Morshona takes a robust approach to help organisations redefine risk. Morshona approach brings risk back to the front line and helps organisations be proactive - spotting potential risks early, having useful and relevant data, gaining early insights and making good strategic decisions to achieve better organisation outcomes.
Risk functions need to be redefined
With the collapse of trust across many industries, regulators are increasing oversight, regulations and compliance. This has material impact on organisations in the form of increasing costs and the divide between the risk management process and the business operates.
To reclaim trust, the Leaders, executives and operations need to align on risk – in a cost effective manner. And to do this, it’s important to change the way businesses identify, manage and report on risk. The strategy is to seize the opportunity in risk, and find value in each risk decision to create sustainable organisations that maintain or reclaim community trust.
In redefining the risk unit function and processes, businesses need to utilise emerging technology and its use of data so there is a single source of truth used for business information, adding to compliance and reporting, and for internal and external assurance.
To achieve the right outcomes, businesses should be considering these key questions:
What is the business’ risk appetite and the longer term opinion?
Who is answerable for risk management?
What is the best digital platform and how can data play a role?
Find out how business can redefining their approach to risk.
Risk functions must be redefined
How businesses can seize the opportunity in risk and find value in risk decisions.
Risk in everyday life
It always takes a significant risk event to occur before the current situation is challenged and organisations realise that risk should be done better. Risk management often fails because it’s removed from the shop floor, is operating in an increasingly complex compliance and regulatory environment and an inability to correctly interpret the complexity of data.
Moving from ‘thinking’ to ‘actuality’ so that risk appetite, culture and operational risk echo at all levels from the board to the shop floor requires understanding risk in the context of ‘everyday life’ tangible situations. To bring a risk appetite document to life and make it real and applied within an organisation, the use of situation planning and technology is required.
Situation planning workshops can help across risk at three levels: emerging/strategic; corporate or tactical; and operational. A Leader may focus on strategic risk such as trade relationships, while executive’s focuses on corporate reputational issues, and marketing staff focus on risk in customer service activities.
If businesses embrace situation planning and technology to make risk ‘everyday life’ and bring it to the shop floor, everyone across the business can contribute to, and access the same data. Staff of all levels can see how risk and reward work together, and make better risk-aware decisions as a result.
Explore how risk technologies can close the gap between leadership strategy, company decisions and operational risk.
Information for a proactive approach to risk
Businesses can empower decision making, regulatory reporting and customer relationships by embracing the power of information and analytics and get on the ‘proactive’ side of risk. Being proactive means having useful, reliable information that shows known and potential risks early, and can be used to help make decisions that protect the business. Data can provide early insights to help drive better decision-making resulting in greater outcomes for all. But quality information is key.
Information can add an element of risk. Information is fast becoming an intangible asset and organisations need to take technical measures to safeguard information, raise awareness across all levels of the company and ensure an information strategy is adaptable to the privacy challenges ahead. The volume and speed at which information is moved also adds risk elements.
To utilise information as an offensive risk management tool, businesses need to assess their current level of data sophistication and map out steps to information maturity. As a starting point this could mean identification of disparate sources of information and truth or systems that are not ‘talking to each other’ to provide any real value or insights.
Morshona can help progress the business to develop robust, ethical, and integrated information that can be used and be risk proactive.
Discover how being proactive can improve consumer outcomes and has benefits for employees.
Information for a proactive approach to risk
Embrace information and risk proactive.
Emerging technology risk
Fresh and troublesome technologies such as artificial intelligence, machine learning, Internet of Things and automation are helping to deliver better outcomes and experiences for personnel and consumers, and at lower costs. The reverse however is that these emerging technologies are changing the risk profile.
This is makes Leaders and Executives worry yet risk managers are rarely in a position where they can effectively prepare the organisation. They need the right capabilities and understanding of the underlying algorithms to properly assess and manage the risks.
Five key questions every Leader and C-suite should be asking about its approach to emerging technology risk:
Is our risk framework up-to-date and fit for purpose?
Does our risk team have the appropriate skills?
How do we ensure risk management allows maximum returns?
What data points do we have to provide oversight?
Have we assessed the risk exposure from our third parties?
The benefits and value of emerging technology to customer, supplier, employee, financial and risk outcomes are clear and undisputable – but taking a pragmatic risk lens to using emerging technology from the outset is a must.
Learn how organisations can embrace the benefits of emerging technologies while managing the inherent risks.
For more information on how to turn risk into rewards, talk to Morshona Risk Advisory team.
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