Three essentials steps for smart cross-border risk management
For decades now, business has been very international. Companies – especially the bigger and mid-sized organisations – regularly trade in countries all over the world and many have of those companies will have a presence in a good number of those countries.
Oxial client Barclays is a good example. A British Financial Services (FS) provider, Barclays established its first non-UK presence in 1925 and today has a presence in around 55 countries. Globalisation and the lowering of trade boundaries have provided a major opportunity for international business, but cross-border working does come with its own challenges.
One of those challenges is how organisations approach risk. Risk management is an essential element of business, one that has got harder and more complex than it has ever been previously. The risk landscape is interconnected on many levels, and risks are not confined by geography as was once the case.
Given that the severity and nature of risk has increased too, mitigating risk has become a major enterprise priority. What three elements are essential for businesses to have smart cross-border risk management?
Appoint the best Chief Risk Officer you possibly can
Managing risk for an organisation in 2019 is no small undertaking. You are facing a wide variety of risk, from cyber security to increased compliance regulation and from political instability to climate change, and all manner of other risks on top of that.
They are just the global risks, and you also have to factor in local risk too and consider how local risk could impact the organisation on a global level. The consequences of poor and ineffective mitigation and management of risk have also grown more serious. Whether it’s a major fine for non-compliance with GDPR, or a ransomware attack that leaves the organisation vulnerable, fail to manage risk properly and the repercussions are potentially huge.
We wrote earlier in 2019 that we believed that the Chief Risk Officer (CRO) has become the most important role in an organisation and businesses would be wise to take that on board. The right CRO to head up an organisation’s risk management is vital – not only can the right person help navigate the complexities of cross-border risk management but can also deploy risk in a more strategic role for that business.
Get the board behind you
But a CRO cannot mitigate and manage risk entirely by themselves – they need the support of the board too. Most boards talk about the importance of risk to their organisation but that isn’t always reflected in the budget and resource allocated to risk management.
While any CEO would talk publicly about the need to defend their company against cyber crime for example, there can also be a lack of willingness to invest in the rights tools and strategies to combat the increasing professionalism of cyber criminals in 2019.
For cross-border risk management, which indeed includes the threat of cyber crime, the same is true. Without genuine backing from the board, both in terms of financial support but also in prioritising risk management and treating it with the seriousness that it warrants, any organisation will struggle to be truly effective in its risk management. There needs to be a regular and direct line of communication between the risk team and the board, so the board understands what risks the company is facing and can make informed decisions on how best to move forward.
Deploy the right risk management tools
There are a number of options available for any organisation that wants to use technology to help and support its risk management function. An important distinction to make when choosing risk management software is the need for continuous monitoring and updating of risk. There is no start and end when it comes to risk – it is always there, always changing and risk management technology must be able to manage this.
That’s why adopting an automated digital tool, such as Oxial Risk, makes so much sense for modern businesses. Doing so ensures a continuous and on-going protection against a wide variety of risk and it can cover a range of different geographies and the risks that emerge from each of those.
With straightforward risk classification, a proven risk treatment methodology and a range of features and functionality, Oxial Risk can identify and proactively monitor the mitigation of high-risk areas across the organisation and prevent losses with early detection and predictive risk analysis. This is essential when attempting cross-border risk management and Oxial can easily adapt and enrich for all evolving business and regulatory requirements, both locally and internationally.
There are subtle differences between the risks faced by an organisation in different countries and managing that risk is an increasingly complex and important role within a business. Cross-border trade is only going to get more inter-connected and organisations must address cross-border risk management with the seriousness it deserves.
For detail on how Oxial approach cross-border risk management, why not get in touch with one of our risk management experts here?