Risk & Economy » Dealing with the changing risk landscape

For organisations of all sizes in all sectors, risk is an increasingly complicated matter. Exacerbated by the current landscape of geopolitical change and disruption, technological innovation and evolving business models, the range of risks CFOs are having to deal with seem more complex than ever before.

One organisation that is acutely aware of this changing risk environment is Riskonnect. Andrea Brody, the risk management specialist’s Chief Marketing Officer, says that this complex picture means organisations can no longer view risk on a department-by-department basis.

“Most industries are trying to deal with political instability, economic constraints, trade volatility, regulatory changes and talent shortages. Then add the exponential growth of cybercrime and it’s clear to see risk is a major issue.

“All of these fast-paced changes make it extremely difficult to fully understand and manage the key risk facing an organisation at any given time. While companies and their departments can operate in silos, ONE single threat is capable of single-handedly impacting many parts of the organisation and damaging brand reputation or corporate and financial performance.”

As organisations adopt more of a holistic view of risk management, the CFO or FD is often playing a central role according to Brody, with many holding more risk-based responsibilities than ever.

“We are seeing more and more that the CFO is the first line of defence in establishing and maintaining adequate risk management and mitigation. As the CFO’s role is expanding into helping to establish and execute strategy, they have become well positioned to help ensure that an enterprise’s risks are identified, assessed, managed, and integrated into the corporate strategy.”

First line of response

Given this trend, how does Brody think CFOs and FDs can respond to this set of challenges – given they are key custodians of data and have an overseeing position in most companies?

“First and foremost, they must ensure that effective risk management programs are aligned with corporate objectives. In addition, they should never exist in isolation from the rest of the organisation.

“Risk management must be the job of every department, becoming an integrated part of the company’s routine management processes. Since the CFO is in a position to hold important data, they have the unique opportunity to build integrated processes across the business and report on risk exposures that can act as early warning signals for known risks and help identify new ones.

“Not only can the CFO make sure appropriate procedures are in place should a risk event occur, he/she is in the best position to assess adequate insurance coverages and financial reserves so that the company has the best strategic, financial, and operational response to any type of loss.”

Compelling proposition

Given the changing threat landscape and the need for risk to be managed centrally, Riskonnect has been developing its proposition so that CFOs have the cross-organisation visibility they need for board reporting, as well as the need to engage effectively with other parts of the organisation regarding risk.

“Riskonnect is the only integrated risk management solution that provides visibility across all areas of risk which includes marrying both insurable and non-insurable risks together,” explains Brody.

Riskonnect’s IRM solution, for example:

  • fosters a top-down, risk AND compliance-based culture throughout the organization, eliminating silos and enabling organisations to identify situations where a risk factor in one area affects risk areas in another.
  • reduces redundancies and inefficiencies by eliminating and/or automating non-value processes
  • enables organisations to see how risk management, compliance, and security can further their business goals and uncovers opportunities to take calculated risks.
  • make it easier to comply with new legislation
  • correlates risk relationships to present a clear vision of a risk’s impact and influence across the entire extended enterprise.
  • enables risk reporting to advance management’s risk appetite dialogue with the board

“With Riskonnect, CFOs and FDs can leverage integrated data to show how risk mitigation programmes are performing,” explains Brody. “This can help the board to prioritise spending on mitigation efforts and understand the return on those investments.”

A recent Riskonnect whitepaper concludes that, by 2025, CFOs (and chief risk officers) and their teams will need to become more proactive in their risk management strategies and capabilities, in order to fend off the broadening swathe of multiple risks impacting financial institutions daily. Riskonnect’s IRM solution seems like a positive step towards that aim.

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From FWD Research