In 2020, businesses can expect to see more changes in the tech industry. This may include social platforms, automation, and artificial intelligence, among others, which may improve convenience to daily operations and cause a business to run smarter.
However, the same tech could also create new risks. In 2020 and the years ahead, more businesses will go digital, which will make the management of risks a critical task.
What Is Risk Management?
Risk management involves the identification of threats, the assessment of risk, and working towards reducing risks. This approach dictates the tools, processes, and techniques to employ for each project.
We tell you how risk management should be structured and performed. Here are some pointers on how you can get ready for risk management planning in 2020.
Improvements in risk management can be reached through selective digitization. Digital risk focuses on work-flow automation, new data sources, and advanced analytics. Digitized functions offer effective regulatory compliance and better control and monitoring. Understand that digital risks vary from one organization to another.
For some, the automation of key business processes could result in downsizing. The most common digital risk faced by every organization is security. As companies become more tech-savvy, the digital threat is evolving and becoming more pervasive. However, businesses quick to take the right approach can focus more on digitization opportunities while also protecting themselves.
Although action areas are extensive, there are three which are crucial for optimal efforts, including stress testing, credit risk, and operational risk and compliance. For any business to be prepared for 2020, the whole organization must have integrated risk management. This allows managers to have an understanding of the strategic and operational risks.
Without a clear view of these risks, it can be challenging to anticipate threats that may be introduced by new technology. We are getting into a decade where the digital era could be extremely different from what is top of the mind for risk managers. The key principle is to stay proactive in risk planning.
It is highly challenging to avoid project risks. As your project progresses, the impact of risks begins to change. New threats may then start to emerge, while residual risk decreases or increases. In such a case, what tools should a project manager leverage to control the risk?
One of the tools to be armed within 2020 is a risk assessment tool. This involves the identification of new risks, evaluation of current threats, closing risks, and the evaluation of risk management processes. The other is a risk audit. A risk manager should use this tool to find out how effective risk responses are. They should also evaluate and respond to the risks.
Variance and trend analysis is the other tool. When the variances rise, uncertainties, and risk increase. A manager needs to follow the trends to prevent the situation from getting out of control.
Plan For It
Every organization geared towards a successful adventure in 2020 must take a calculated approach towards risk management. From regulatory changes to cybersecurity and employee theft, the world of business is faced with too much risk not to have a strategy.
For you to be successful in your risk management efforts, you must involve every department, processes, and policies in your organization. Begin by clarifying roles and act on each threat appropriately. Also, look out for risks targeting your competitors, customers, and collaborators to establish better ways of building your capabilities.
The risk management process helps the management to perform a risk assessment and take proactive measures towards managing adverse outcomes. Planning ahead can also help the management to meet business goals. Because projects are not always the same, each approach to risk management must be tailored to the nature of the processes.
The 2020 Risk Manager
Although information technology has changed, risk management, in essence, has not. What has changed are the complexities in IT. The threats around it keep increasing and evolving. Today, risk managers are either performing tedious tasks on the output or the input side.
Today, the working environment is hyper-connected, meaning it is not enough to manage your own network. The setting is also more dynamic, with new threats emerging by the minute. The risk process, therefore, must be agile. In 2020, a risk manager must be able to zoom and see how the risk levels have changed.
For a manager to mitigate the risks, the threats must be addressed continuously and timely. The most crucial prerequisite is ensuring that the whole organization has a uniform approach to risk management. There also needs to be clear governance to ensure that risk management is enforced. Proper planning must involve a structured process through factoring in aspects such as changing legal and regulatory requirements, business model, and the emerging business standards.