Enterprise Risk Management Best Practices
Enterprise risk management best practices: knowledge is the key to not only identifying risks, but leveraging them for success. When it comes to enterprise risk management (ERM), a cognitive-semantic approach to information enables key best practices like no other technology.
According to The World Economic Forum’s Global Risks Report 2016, “Information and communications technologies have internationalized supply chains, linking trade and investment ever more tightly.” Today, managing risk means knowing what’s happening in your universe—your supply chain, your competitors, your customers—and seeing what’s coming in the world around you.
Enterprise risk management best practices: a world of new opportunities
The increased internationalization of business and supply chains and the unprecedented amount of information available present both challenges and opportunities for today’s ERM. With its ability to make the most of information, a cognitive platform enables a number of enterprise risk management best practices.
- Leverage all data: Structured data that powered traditional risk management does not reflect the real-world risks incurred by doing business today. Unstructured information—email, social media, news articles, research reports, server logs, internet of things data, watch list data, procedural documentation, etc.—integrated with structured database information can provide rich context and insight to strengthen ERM. For example: Watch list, sanction and other international databases can be used to vet potential business partners, vendors or suppliers; extra-industry events, global financial or health crises, or socio-political and environmental issues occuring in all of the countries where you do business can impact operations in many ways, and merit your awareness through monitoring, etc. Being able to leverage all data is especially important when it comes to reputation management, where events small or large—scandals with brand ambassadors, strikes or ethical issues—can have extraordinary reach, in hours or less.
- Embrace an inclusive information approach: Information that is isolated in internal silos can lead to unexpected or underestimated exposure to risk. When it comes to operations and reputation, internal events—in R&D, product development or internal labor strikes—can be just as impactful as external ones. ERM requires a solid foundation of information that reflects the entire enterprise, not just a single department or business area. By using all the available external and internal information, a cognitive platform can extend the same analysis capabilities across the organization, enabling maximum visibility and greater opportunity through the sharing and re-use of information.
- Leverage risk intelligence to create value: A key enterprise risk management best practice is being able to leverage risks for greater advantage. Companies that have greater, more comprehensive insight into their business and their risks are better positioned to not only manage the risks, but to take advantage of new and emerging opportunities. For example, changing customer attitudes or new environmental and governmental regulations can increase demand for more sustainable energy sources such as solar or renewable energy, electric cars, etc.; analysis from anti-money laundering compliance can provide useful insight on customer habits, purchasing patterns, etc. to improve customer service and fuel product development.
- Don’t forget to incorporate cyber: Cyber threats—in the form of malware or ransom attacks, internal theft or fraud, data breaches, etc.—is an important aspect of risk management that can benefit from a cognitive platform. Cyber-related risks hit organizations where it hurts, targeting digital information on company operations, sensitive customer data and other intellectual property. These risks have the potential for extremely visible consequences for reputation and significant financial impact. For example, the data leaks at Home Depot and Target cost the companies millions of dollars in lawsuits, and untold trust capital in terms of their relationships with customers. A cognitive/semantic platform can be extremely powerful in preventing business disruptions by providing greater intelligence on hacking attempts and for geo-political information critical for the safety of in-country staff and resources.
An approach backed by cognitive and semantic technologies enables a number of enterprise risk management best practices that can uniquely address both the requirements and the opportunities presented by data through the full use of all available information.
For more information on how the Cogito platform can help you take advantage of information, visit this page.