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What is risk management software?
Risk management software is a tool for businesses to identify risk tolerance and take appropriate measures to mitigate such situations. The software offers tools to document corporate governance, risk, and compliance tasks as well as ensure that these elements align with the business objectives.
The key features of the software include risk identification, risk assessment, mitigation planning, reporting, and preventive action planning.
Gartner defines integrated risk management as “a set of practices and processes supported by a risk-aware culture and enabling technologies that improve decision making and performance through an integrated view of how well an organization manages its unique set of risks”.
Risk management software helps organizations measure the level of risk in ongoing projects and processes, and then generate meaningful insights as well as an action plan.
The benefits of risk management software
- Mitigate risks and address threats in a timely fashion: The sole purpose of risk management software is to identify threats and address those well within time. Unaddressed issues can result in project failure as well as scenarios that generate negative publicity or damage the brand. The software would ensure that your projects, processes, or audits follow the guidelines. Leaders can intervene as soon as they detect a change from the regular course of action and make early moves to mitigate the risk.
- Create a risk-aware culture: The software can also maintain a risk register, which includes in-depth details about the risk, its indicators, impact, and the actions required to avoid/minimize it. An organized database helps businesses train employees on the risks, the impact, and the preventive actions to be taken. This helps in creating a workforce that’s more risk aware and trained to operate systematically.
- Risk prioritization and assignment: No two risks have the same impact level. The software assesses the risk and assigns relevant scores to each risk. This helps businesses prioritize risks and escalate it to the concerned stakeholders. It saves the time taken to resolve the issue and ensures that the impact is minimal.
Typical features of risk management
- Risk assessment: Assigns scores and ratings to risks or classifies issues based on multiple factors. Aggregates all the risk scores and categories from each assessment to create the business's risk register.
- Dashboard: Sets and assigns key risk indicators (KRIs) and monitors these live on an interactive visual display.
- Alerts/Notifications: Allows you to set and configure alerts for critical events and receive notifications in case of a breach or failure.
- Risk reporting: Defines and records the KRIs that measure the efficiency of a risk management program in a defined format.
- Compliance management: Ensures that risk management processes meet all the necessary regulatory compliance by defining and tracking processes and rules.
- Auditing: Provides reports and tracks the status of risks and incidents to ensure accurate internal and external audits, so that businesses are always compliant.
Considerations when purchasing risk management
- Define your expectations from the software: Risk management software offers broad functionality—from project risk management to financial risk management. Each type of software has its own set of key functionalities. Buyers should list their expectations from the software and then begin their search.
- Plan for your budget: The software isn’t cheap—ranging from a few hundred to thousands of dollars per year. The advanced features cost more. Therefore, plan a budget and shortlist suitable vendors. We recommend shortlisting solutions that can meet the needs of your long-term business strategy.
Relevant risk management trends
- Cognitive intelligence to augment traditional decision making: Advancement in cognitive technologies, artificial intelligence (AI), and real-time data analytics have advanced the scope of risk management. These smart machines can detect, predict, and prevent risks by self-learning and self-managing the defences against old and new threats. For instance, Warwick Analytics’ early warning and prevention system looks hours, days, and months ahead to predict when and how products in the field (such as aircraft and vehicles) will require maintenance. Identifying the root causes of failure helps them take corrective actions such as remanufacturing and redesigning products.
- Risk management to be tied up with employee performance: These days, managers consider risk in terms of an employee’s ability to innovate current workflows. As risks are now measurable, the software allows businesses to relate risk with the desire to innovate existing processes. They can then create a balance between risks and rewards. This new strategy will encourage employees to make risk-informed decisions.