Risk is scary but an inevitable part of life. But risks can become assets and this is evidenced in the story of many successful people and organisations.
So how can you turn or transform that risk facing you now?
In response to this question, PWC a global accounting and tax firm, has released a special report on guiding principles and objectives for the transformation of risk into a self-funding asset.
These objectives include making sure business is designed with the expectations of customers and society in mind.
It also aligns risk management with the strategy, purpose and values of the business, rather than just laws and regulations.
The following are objectives given by PwC in order to help turn your risks into assets.
– Businesses will need the capabilities to operate in a predictive, preventative and proactive manner. And they’ll need to be able to make the most of next-generation technologies to deliver advanced insights, real-time risk monitoring and crisis anticipation.
– Further priorities include working out how to manage risk within today’s complicated ecosystems. Conventional risk management frameworks are not set up to monitor and control the risks that stem from so much reliance on different partners and so much data traffic moving between them.
Start-ups are accustomed to operating within such ecosystems and have sought to put in place the necessary oversight and control. Established institutions still tend to have work to do.
– Progress mapping identifies key priorities ahead: To progress map, ask questions like; How are risk teams performing across five key dimensions: skills, taxonomy, digitisation, strategic alignment and cost effectiveness.
The results help organisations to identify strengths and weaknesses, compare themselves against their peers, and target limited resources at where they can make the most difference.
What marks out the top-rated organisations from the industry pack is the extent to which risk teams understand the dynamics and implications of non-financial risks. Risk strategy and governance are also closely aligned with the changing purpose and values of the business.
The main weaknesses of a business is centred around analytics and insight, however, the chief stumbling block tends to be lack of funding; how much investment is needed and how much is available. Indeed, risk teams are under increasing pressure to cut costs and deliver more for less.
To solve this, Moving to the cloud is the starting point. This can drive out needless costs and sharpen operational agility, while laying a platform for next generation technology.
The leaders are also marked out by three further attributes: digital upskilling, a problem-solving mindset and close engagement with business teams. Together, these improve their ability to respond to emerging risks and make the most of the latest tools and technologies.
Another solution is Invest to save: Are the front-runners spending more than the industry average on risk transformation? One of the ways to make transformation largely self-funding is to reduce costs with one hand, while investing with the other.
How can your business strike this balance between cost out and value in?
1. Set a clear vision
While limited resources will inevitably curtail some plans, leading organisations have still been able to set a clear vision for risk transformation, then work towards it in repetitive steps.
The blueprint for the future focuses on technology and operating model transformation, along with associated upskilling and new ways of working. The vision also includes how risk teams should engage with the business frontline and the role they play.
For example, rather than just a yes or no to strategic plans, there are now more opportunities to work with the business to balance risk and reward as part of the tech-enabled and problem-solving approach.
2. Assess your fitness for the future
Assessing your capabilities against key transformation dimensions can help you to identify areas in most urgent need of improvement. It can also enable you to develop a clear business case for funding and create a baseline against which to gauge progress and return on investment.
3. Take your cue from the business
By focusing digital investment on specific use cases or solving particular issues within the business, you can boost the benefits and accelerate the financial payback.
Savings of between 15% to 30% can be achieved through this targeted, business-led approach. While some objectives take longer, it could take less than a year to achieve key gains in areas such as implementing specific process workflow simplification, delivering a rapid analytics proof of value, or realigning the three lines of defence.
Culled from Informa (PwC)
Read Also: Five Key Things Your Business Should Do In Order To Survive in 2021 – PwC
