Risk intelligence measures an organization’s understanding and implementation of risk management strategies, which are essential to gaining a competitive advantage in any industry. However, after indexing nearly 400 organizations, RSA concluded that less than 10 percent of companies have a risk management strategy that is mature enough to be considered “advantaged.” This signifies that 90 percent of enterprise organizations are missing out on the opportunity to create a competitive advantage by implementing a comprehensive enterprise risk management (ERM) strategy.
Reactive vs. Proactive Risk Management
Possibly the most telling statistic from the Risk Intelligence Index is that a paltry 22 percent of organizations reported the ability to use IT and security risk management as a competitive advantage. This demonstrates that the overwhelming majority of today’s enterprise organizations view risk management as a reactive protocol.
Unfortunately, this could not be further from the truth. All too often, this approach comes back to haunt organizations that wonder why their competitors spend so much time mitigating operational derailments. Risk management strategies should always include processes for handling unforeseen events and circumstances that threaten business objectives, but the strategy should not stop there.
At its most effective, risk management is an overarching business process that enables both the mitigation of unacceptable risk and proactive vigilance to prepare for future risk. In practice, this involves cooperation among all areas of the enterprise with executable business objectives—not separate entities managing their own perceived risk.
Advanced Detection Strategies
The ability to detect potential risks before they affect business objectives is not an inherent aspect of risk management. This is easily evident by the fact that only half of enterprise organizations have the foresight to anticipate regulatory changes. Instead, advanced detection of these types of risks involves discipline and initiative.
Strategic planning to identify potential risk will likely include combining risk history with emerging technologies and regulations related to business objectives. By recognizing potential external risk factors before they influence operations, associated business assets can be adjusted accordingly.
To muster the initiative to be proactive with advanced risk detection, the majority of enterprise organizations will need a new perspective on risk management. According to the RSA report, only 27 percent of respondents viewed risk management as an essential process for business growth. If organizations hope to create truly effective ERM processes, they’ll need to first understand its value to the organization. What’s more, organizations without fully realized risk management solutions often end up shortchanging their own potential.
Gaining a Competitive Advantage
One of the best ways to inspire change in this area is to view ERM as a means to gain the competitive advantage. This advantage can be boiled down to the simple fact that risk and opportunity are not that different. When you identify and mitigate threats to your business objectives, you simultaneously create an opportunity for improvement. These opportunities are a natural byproduct of ERM’s inherent ability to enable smarter business decisions. When you are able to see adversity on the horizon and adjust accordingly, your enterprise has already gained a competitive advantage over companies with a purely reactive strategy.
The bottom line is that enterprise organizations with high risk intelligence are better equipped to handle adversity. As such, they have a distinct advantage over competitors that do not have a proactive vision for risk management.