Risk functions have to be able to confidently take advantage of one another’s work so as to eliminate gaps in risk coverage and increase efficiency. A focus on the optimization of each function builds the levels of confidence in one another—and on the parts of stakeholders—that will move all risk functions toward more-integrated approaches, which, in turn, will maximize risk coverage, eliminate blind spots, reduce duplication, create efficiencies, and produce greater risk insight for stakeholders and the board.
Consider these steps to move toward optimization.
As organizations increase the level of quality and the ease of accessibility of their data, risk functions can more easily rely on that data, which sets the stage for automation. Several risk functions in the study (but not the majority) are using robotic process automation to automate data retrieval. A continued push toward more automation of routine tasks will free resources to focus on areas that require more-complex thinking and to spend more time collaborating on a joint game plan for managing risk.
With a common data and analytics foundation in place, team members will be able to look at risk data differently and thereby make more-complex judgments and quick adjustments. Risk function leaders will want to challenge teams to think differently and develop new perspectives. For most shops that will require investing in upskilling—not just in technical skills but also professional development such as critical thinking.
Transformative use cases from outside our company can inspire creative, disruptive ideas and help us ensure we are not missing a trend.
More often than not, the leaders of an organization’s most-strategic initiatives receive insight on what could go wrong in a sort of piecemeal or episodic fashion—rather than by means of a combined, holistic perspective that would demonstrate the magnitude of risk and therefore could compel an action or actions that the leaders would not otherwise have taken. With nearly every organization going through multiple transformative changes nowadays—each of them with accompanying interdependent risks—the ways that risk functions work together on strategic initiatives comes to be of critical importance.
Partner and Primary Author of the Global Risk Study, Risk and Regulatory Practice, PwC US