Technology that improves decision making and visibility into the risk management and security systems of an organization support the practices which can be termed integrated risk management. Here, the focus is strictly risk-centric and not compliance focussed. There has been a shift from traditional ways of governance, risk management, and adherence to a more integrated approach, which shows that modern businesses’ needs have changed. Rather than blindly putting risks first, integrated systems arm organizations with the capacity to identify and handle their unique risks.
Integrated risk management
Integrated risk management involves a particular set of practices. Six in number, they are strategy, assessment, response, communication, monitoring and technology. To enable a framework that would improve performance, ensure effective governance, and own risks are the strategy. Prioritizing risks by identifying, assessing and then dealing with them as soon as possible by employing mechanisms to limit risks is essential. Next is the need to report or communicate to the stakeholders of the enterprise’s risks, and then comes the process of tracking risks, accountability and compliance to mitigate risks effectively. Finally comes the technological part: the importance of designing and implementing an integrated IRMS, i.e., an Integrated Risk Management Solution.
A fully developed IRM program will present the leaders with a comprehensive dashboard full of all risk categories to gain insight into all the risk areas. These solutions empower businesses to manage emerging and present risks in digital, compliance, geopolitical, third-party and cybersecurity areas.
How is it essential in Digital Transformation?
Implementation of IRMs can be highly beneficial to organizations in the present times; discussed below are some of the reasons why:
- The rise in the number of digital business processes: Organizations often use digital strategies enabled by the IoT and social media to try to become more efficient in financial terms and customer satisfaction. But with this involvement, risks also multiply primarily digital chances of data fraud and privacy and security concerns. To effectively fight against these threats in the rapidly transforming digital economy, IRM is essential.
- Globalization and the increase in digital risk: such operational risks are sometimes created by globalization which IRM can only address. Be it natural disasters or geopolitical crises, everything that can disrupt the functioning of a business is a risk. IRM empowers the leaders with information that can help them make better decisions with minimal delay.
- Third-Party risks: When organizations lean on third parties for help, it is very much possible that this has invited newer threats. The handling of sensitive data by third parties can directly lead to data fraud or leaks. Their role in the organization is operational, and this is why managing risks is integral to the function of IRM.
To conclude, in the age of globalized economies, third-party reliance and transformative digitization of processes, the proper IRM can enable efficient, flexible and satisfactory decision making while optimizing the appetite for risk and encouraging successful collaborations.