In these COVID-19 times, it is extremely important to be able to adjust to quick, unexpected change, and risk management is a key component.
Many firms were hesitant to alter their tried-and-true method of managing hazards department by department before the pandemic struck since it had worked so well. Why fix something that isn’t broken, anyway? Even if there could have been opportunity for improvement, a lot of the problems looked minor, so it was frequently simpler to just put up with them.
That strategy appeared to be working just well for many people up until the coronavirus catastrophe rocked the world.
Traditional Risk Management’s Demise
Organizations all across the world were forced to scramble to deal with operational and financial challenges they never considered, let alone planned for or rehearsed for, due to the pandemic’s fast-moving, interlinked threats. Companies that lacked access to complete, accurate, and fast data were immediately at a disadvantage, often with dire repercussions. Action is nothing more than a wild guess if you don’t have all the information.
The crisis may have raised the alert, but when the coronavirus inevitably dies down, the obvious flaws in the way risk and compliance are often managed will still exist. Today’s risk picture is more cluttered and unclear than ever, even when there is no crisis, and almost every risk is increasing. in velocity and ferocity. It’s difficult, if not impossible, to assess your true exposure with the fragmented view provided by old-school risk management techniques. And if you can’t see what’s coming, how can you possibly get in front of it?
Integrated risk management’s ascent
A similarly integrated approach to risk management is necessary in today’s always-connected society. Senior leaders must collaborate with a growing number of stakeholders to identify, manage, and mitigate risk if they are to thrive in a world where social media, mobile devices, and constant scrutiny from both inside and outside the business are the norm.
To proactively handle accelerated and amplified risks, stakeholders from throughout the company need to be able to freely communicate information and concepts. Top decision-makers must have access to all of this knowledge in real time so they can make the tough strategic decisions necessary to advance organizational success.
That requires a comprehensive strategy for risk management.
Any aspect of your organization’s integrated risk management that might compromise its competitive position, reputation, or strategic growth is brought into sharp light. It ties together every risk – insurable and noninsurable, strategic and operational – so you can see what you’re up against, how everything is connected, and how the overall effect will affect the company.
Comparing the past and future
Here is a comparison between integrated risk management and a conventional strategy:
TRADITIONAL RISK MANAGEMENT
INTEGRATED RISK MANAGEMENT
Focuses primarily on hazards and other insurable risks
Focuses on all risks and opportunities that affect an organization’s performance, including intangibles like reputation.
Aims to prevent or mitigate loss through insurance or safety improvements.
Aims to increase the organization’s value through increased efficiency and better decision-making
Analyzes risk independently.
Analyzes risks individually and collectively, how they relate to each other, and the cumulative impact on the organization.
Assesses risks at certain points in time.
Assesses risks and opportunities continually.
Department by department
With integrated risk management, all the information you require is conveniently available to all decision-makers in one location. With complete insight, you can act quickly and with data-driven decisions to reduce risk and maximize opportunity. Instead of being something to be dreaded and avoided, risk becomes a tool to enhance performance and produce strategic value.
Integrated risk management is now a must in the modern world of constantly shifting dangers. Simply said, you must be able to gather information fast and utilize it to guide your course of action.
Consider your shortcomings and your faults if you didn’t have so much insight into your risks throughout the present crisis. Your future could be at stake.
Download our e-book, Conquering the New World of Risk with Integrated Risk Management, for more information on IRM.