Global trends have reshaped industries and completely changed the priorities and the way companies design, build and deliver services to consumers and corporate clients to stay relevant. When uncertainty and complexity are latent in daily operations, decision making and projections are made difficult. Due to the lack of clarity and certainty of the future. Decisions that could potentially affect business strategy or objectives in the short, medium and long term.
The accelerated increase in the implementation of new technologies has brought with it tipping points in terms of security with respect to their use. Preserving the security and protection of information is possible through the adoption of a risk management methodology that, from a technological perspective, ensures control over the infrastructure at the physical level, information systems at the logical level and organizational measures at the human level.
Risk management, contrary to what many people think, is not a brake on the growth and progress of the organization. This process contributes to a change of mentality from the inside. In order for the results to be as expected. It is important that employees, area leaders and managers are aware that it is necessary to adopt it. Is the only way to foresee and identify in time possible situations that may affect the company’s operation. Including its logistics, strategy and finances.
Considering the above, what is risk management? It is a strategic methodology to identify and respond to risk factors that could impact the success of a project. And that by identifying them correctly, give rise to anticipate and take control of possible future threats or incidents. A well-structured and implemented risk management methodology helps to make decisions based on reliable information. Means that by implementing the appropriate tools, it is possible to have greater certainty to allocate resources. Considering risks to mitigate and probable causes of the different possible scenarios that the organization would have to face.
What are the risks that could arise and how to address them for correct decision making?
Although risk management is a booming topic in companies, in some cases, there are still affectations in terms of security. Due to incorrect implementation or lack of attention to certain warning signs that indicate possible adverse events that may go unnoticed, among which are:
Leadership management and tone of questionable leaders
The task of exercising direction and control by leaders must be directed towards a role of guiding. This guarantees the effectiveness of the risk management model. And the successful implementation of the strategies. As for the tone of leadership, it is vital to focus on openness. Continuous improvement and commitment of the different areas and also to encourage proactive behavior in employees. A poorly managed leadership that is not open to change could create a barrier. Also resistance to accept negative news or contrary information.
Imprudent risk taking
Risks must be taken with discipline. Without hasty determination. Knowing that they are the starting point so that the impact is as small as possible. The organization must choose the right person to be in charge of the proactivity of the employees. Also of the management and follow-up of the primary risks and of the periodic accountability. To ensure that they are assumed in a prudent manner within the established limits.
Inconveniences with management performance
In many cases, the risk management model is out of focus. This is due to limited resources, poorly assigned roles, lack of anticipation and organization of priorities. The model must be designed with a strategic focus. Based on the organization’s vision, and its impulse must be from the top down. From management to employees, and not the opposite, as is often the case.
Incompetence or ineffectiveness of risk assessment
This deficiency occurs when assessment activities do not effectively and accurately identify the company’s real risks. It also happens when they are identified in time. But not shared and socialized with employees so that there is a common vision. What for some is of vital importance, for others may go unnoticed. So it is important to involve the main stakeholders.
Lack of integration and commitment to performance
When a strategy assumes potential risks as a simple complement, it leads to unrealistic objectives that reflect in the goals set. This approach results in a disjointed strategy, making it impossible to achieve compliance. Risk management must stay connected to the core processes, avoiding absorption by insignificant details. Losing focus on what truly matters puts the execution of the project at risk.
To avoid putting the project objectives at risk, it is necessary for the organization to take key actions. Such as updating the governance model for a more adaptable one. Having a team with the right skills. Having technology to track customer actions. Strengthening cybersecurity and privacy. And adopting data intelligence and more advanced architectures.
How to properly implement a risk management model?
The University of Southern California Marshall School of Business recommends the following information security risk management methodology as ideal for effectively intertwining people, organizations, and technology. This approach focuses on integrating management as a support phase, identifying key dependencies, critical assets, and processes, as well as recognizing existing and future threats.
The methodology aims to establish a management process that focuses on continuous improvement. It starts with the establishment of the context and continues with the identification. Then, communication, estimation, evaluation, treatment, monitoring and, finally, acceptance of the risk.
Phases of Risk Management
- Planning phase: implementation of objectives and phases for the risk management process. The purpose of planning is to deliver results in line with the organization’s overall policies and objectives. Likewise, the communications plan and the analysis of the current organizational context are established to define the scope of technological risk management.
- Execution phase: implementation and operation of controls, processes and procedures. Corresponding to the assessment and treatment of risks.
- Verification phase: evaluation and measurement of the performance of the processes. Against the security policy and objectives and reporting on the results.
- Action phase: implementation of changes required for process improvement. It is vitally important to constantly monitor, verify and act in the shortest possible time, without forgetting continuous improvement. In this phase, in addition, the changes and compliance with the indicators previously established from planning are verified.
In conclusion, implementing risk management must go hand in hand with building trust and involving employees during critical moments. Today, organizations with an accelerated focus on innovation and the use of technology in daily business processes are exposed to various risks that could suddenly derail their course.
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Sources: Marshall Business School, USC | Ernst & Young Global Limited
