Most organizations agree that one of the leading challenges that they face is how to manage and minimize a constantly evolving risk landscape. The complexity of the situation no longer allows for organizations to simply identify and implement. controls of common risks within their business as those risks are constantly changing and adapting. Because of this, effective risk management requires a certain level of vigilance and agility inorder to ensure that the organization remains safe while reaching for business goals and objectives.
The challenge of managing a dynamic risk landscape is a requirement for nearly all organizations yet many fail to implement an agile risk management framework capable of identifying and implementing controls at a desirable rate. The issue is that many organizations struggle to identify upcoming trends and thus are blind-sided when a risk presents itself. To better manage this, organizations should consider the following trends when assessing. potential upcoming risks:
· Data. Knowledge is power and, in many cases, the greatest provider of knowledge to an organization is the data they collect. Data can often be the life blood of an organization's success but when mismanaged can become a threat to it success. Data can provide numerous benefits ranging from allowing for better informed decision making, predicting up coming risks, and monitoring the effectiveness of specific controls. Data must be treated as an asset and thus also requires effective and agile data management. Failure to do so can at worst put companies under serious scrutiny and at best put them behind competitors.
· Technology. The implementation of software and technology to improve consumer satisfaction is on the forefront of business growth, however, an increase in the reliance on technology can and will provide a larger risk landscape and areas that must be monitored for risk. Because of this organizations should reconsider how they intend on utilizing technology to their advantage. Several forms of technology and software provide necessary tools for the organizations but many of them require traditional manual processes to manage. Organizations must adopt and leverage the use of AI and automation to better reduce the chance of human error while greatly improving the efficiency of the specified processes.
· Responsibility. Historically, consumers have chosen products and services based on accessibility, today consumers are given more options than ever before. Because of this organizations must uphold a certain ethical standard in regard to environmental and social issues to better stand out from the crowd. It has become so popular that it will likely soon be a requirement for organizations to report on certain ESG factors. With this in mind, it is critical for organizations to shift some of their focus away from traditional financial risks and dedicate time and resources to ensuring that they adhere to specific social standards. Failure to do so could result in a detrimental blow to the organization’s reputation.
If the covid-19 pandemic taught us anything it’s that internal controls are the answer to the ever-growing dynamic risk landscape. Internal controls must be, as well as the means of establishing those controls, must be dynamic and efficient in order to remain relevant throughout the modern business environment. To do this organizations should consider:
● Leveraging the use of data to better identify risks and implement effective controls.
● Incorporate the use of AI and automation to provide better agility to monitoring controls.
● Implement effective and efficient means of reporting to better identify flaws in the framework.
By following the steps above organizations can better ensure that their internal controls are agile and efficient enough to take on the challenge of dynamic risks. This will in turn allow organizations to remain relevant for years to come while continuously striving to meet business goals and objectives.