Reducing Reaction Time to Risk

Written by Risk Management Team on November 16, 2017

If your business is taking a reactive approach, then you may already be overlooking serious threats to your core business. In the area of cybersecurity, for instance, advanced persistent threats prefer to infiltrate and gain more access before striking. Such a strategy enables them to bypass general security measures and remain hidden until they are able to identify high-valued targets. It’s the same technique that was used to breach Equifax and others in recent years and has shown that the modern business landscape requires a new kind of risk management approach—one that proactively seeks to prevent threats.

Understanding how to implement proactive risk management

There are a host of challenges beyond cybersecurity that are inherent with this age of market competition and regulatory oversight. Organizations across every industry must contend with multiple internal and external challenges such as compliance requirements, IP protection, customer relations, brand protection, and the preservation of strategic assets. Each of these areas present risks to your businesses’ ability to perform well. Managing and controlling these risks effectively will allow you to make faster and better business decisions. But in order to achieve such improvements, a shift in risk management is required—moving the focus toward being proactive and anticipating potential risks.

By taking a proactive approach, you can lead an organization that is not only capable of overcoming challenges that present itself, but also drive competitive advantages in the industry. The proactive risk management style improves the way you avoid or manage existing and emerging risks, and provides you with the tools necessary to quickly adapt to a crisis. This model prepares a “before” and “after” calculation for known and probable risk events.

First, an analysis of all leading causes, or drivers, of a specific risk event is collected. For a data breach, drivers can include employees falling to phishing attacks, firewall vulnerabilities, and poor security practices by a technology vendor. Each driver is then ranked by the probability for it to occur. The second part of the proactive approach aims to understand the impact of each risk event. To do so, you analyze the impact drivers and the probability of each occurring (1).

The analysis component of the proactive risk management approach can be further divided.

The building blocks to proactive risk management

Identifying the risks to your core business is the best way to protect your organization from being dealt a crippling blow by an unforeseen event. While it is impossible to create a risk-free endeavor, you can develop a strategy to cope with the risks specific to your core business. In doing so, you add value and position your organization to better compete in the market (2).

What are the most valuable pieces of your business? Know the value of your intellectual property, customers, products, and facilities. This will help you pinpoint the most critical business component.

What current programs do you have in place to protect these critical business components? Look at their strengths and potential gaps. If you are operating in an ever-evolving field, consider partnering with an experienced third-party to cover all angles.

Have you set up an improvement plan? Once you have identified the risk gaps, begin planning the improvements. The road map should prioritize efforts in order of high-value business assets and operations—any risk to a part of your business that can cause the most impact to your bottom line. By modeling the impact of each risk event, you can better inform your improvement plan. The proactive risk management approach relies on specific defenses against perceived threats with real impact on the business.

Do you have sufficient funds? While risk management is a top priority, not everyone will immediately agree how much should be invested into the effort. For this reason, consider building a business case for the required enhancements. Creating a clear reason for each enhancement and the impact on the business bottom line can improve the odds of getting additional funding approved.

Leveraging ERM software to build an effective risk management program

As with most endeavors, technology can play an integral role in building an effective and proactive risk management system. An ERM software solution can help minimize inconsistencies, poor information flow, and a lack of oversight. TotalCompliance©, from ComplianceBridge, is a cloud-based ERM software solution that connects many parts of your business to simplify the way you analyze the probability of each risk event, understand the impact, and create effective countermeasures.

The platform allows you to design tailored and customized risk assessments for every element of your business and create thorough policy documentation on a centralized database that can then be reviewed and approved by various stakeholders such as department managers and third-party consultants. Once each document passes through the appropriate checks, you can publish and notify specific people in the organization about its existence. Finally, the metrics and reporting tools enable you to quickly gauge compliance and spot areas that need your attention. You can even create your own detailed questionnaires and forms to incorporate monitoring and analytical elements all within the same platform (3).

Interested in learning more about how TotalCompliance can improve the way implement a proactive risk management approach? Take a tour today.

Citations

  1. “Taking a Proactive Approach to Today’s Cyberthreats.” The Wall Street Journal. September 19, 2013. Accessed October 18, 2017. http://deloitte.wsj.com/riskandcompliance/2013/09/19/taking-a-proactive-approach-to-todays-cyberthreats/.
  2. “Proactive Risk Management – The Key to Business Excellence.” Proactive Risk Management – The Key to Business Excellence – Insights. Accessed October 18, 2017. https://www.metricstream.com/insights/proactive-risk-management-approach.htm.
  3. “Powerful Policy Management Software from ComplianceBridge.” ComplianceBridge. Accessed October 18, 2017. http://compliancebridge.com/products/policy-management-software/.
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