The near collapse of world financial system has brought about many regulatory changes in the way businesses operate. Due to pressure from regulatory authorities as well as shareholders and other stakeholders, businesses regularly assess risk factors, both internal and external, which can affect the business. Therefore risk management has moved from the exclusive domain of specialist into the domain of the top management of businesses. Businesses now keep track of their risk exposure so that they can respond effectively to both short term and long term risks. By putting in place Risk Management Software, in addition to protecting businesses, management increases shareholder value by reduction in risk.
Once installed, the Risk Management Software alerts managers to the risks associated with any company operation or assets on a real-time basis. The software analyses the data across the entire IT system and indicates the risk factors in the business operations. Risk Management Software also helps the IT managers detect security breaches and reminds them to reassess their security.Risk Management Software also helps in business continuity by identifying potential or actual downtime due to IT problems.
Implementing a Risk Management Software System
To implement a Risk Management Software system, the business has to invest to ensure separate systems are linked to enable all risks to be assessed and managed at a singular point. Communication technology can be used to link different parts of the business systems. This will enable managers to make sense of all the risk data emanating from different parts of the business.
One of the weak links of Risk Management is that different parts of the business may have different perceptions and attitudes to risks. Therefore, all personal should have adequate training in risk perception. It is only when everyone is on the same page that the full value of the Risk Management Software will be realised.
Types of risks in a business
All businesses face multiple potential risks in the normal course of their operations. Traditionally risk management applications have dealt with risks such as credit risk, turbulence in financial markets, interest rate risks, exchange rate risks etc. However, the advantage of implementing Risk Management Software is that they can be set to factor in legal liabilities, project failures, accidents, natural disasters as well as malicious attacks from adversaries etc.
Who are the users of Risk Management Software?
Most financial organisations, such as banks, use risk management and compliance software. It helps them in various ways such as mitigating risks of financial investments, security breaches, business continuity etc. In addition to financial organisations, Risk Management Software is also extensively used by IT and telecom firms, energy sector, insurance sector plus many more businesses. In fact, the “Basel 2” accord, which came into force in January 2008, makes it mandatory for financial service firms to have Risk Management Systems installed.
In today’s world, risk management is an essential part of business operations. Once installed, it gives a degree of protection and advance warning to any business. The expense involved in installing Risk Management Software is well worth the money.