Even the most experienced and competent business leaders can struggle with predicting the outcome of circumstances that involve several variables. Effective risk management, or the strategic assessment of of factors that can affect the stability of a project or company, can significantly increase a company's likelihood of continued success.
Last month, the annual Risk and Insurance Management conference took place in Denver, drawing some of the most forward-thinking minds in the field. One of the major takeaways of the event was that while risk management was becoming increasingly significant to business decisions, it has not yet reached its full functional potential.
In a survey of the risk management professionals present at the event, 76 percent confirmed that their organizations treat risk management as a key strategic function. However, when asked if they believed that their company "uses the risk management function to its fullest abilities," only 20 percent answered positively.
"Boards are asking risk professionals for much more than what is in place. They want to know what unexpected risks the organization may face, and where to invest capital most effectively," said Brian Elowe, a managing director at Marsh told the Wall Street Journal. "If used properly, data and analytics can help organizations make better business decisions while at the same time increase the profile of risk management within the organization."
To effectively manage risk, a company must first possess the necessary tools. Through the use of proper analytics, companies can be better prepared to make important decisions that weigh heavily on their financial future. Risk management software offers executives access to powerful data attribute sets, scorecard implementation and strategy-building capabilities.