The variety and volume of risks and threats facing businesses in 2019 is greater than it has ever been. It can feel like there is risk at every turn for some organisations, which explains why we have seen the emergence and rise of the Chief Risk Officer and also why businesses have started to invest so heavily in enterprise risk management software.
A recent report by Transparency Market Research, predicted that the global enterprise risk management market will reach US$ 5.8 bn through 2027, a significant increase from the US$ 3.9 bn it is in 2019. It really is no surprise to see such market growth, given the complexity and severity of the threats facing businesses – organisations need the best risk management tools to protect themselves and to get the best balance between risk and reward.
But what are the biggest type of risk facing organisations in the latter half of 2019 and what’s the most effective way for those organisations to manage and mitigate against this risk?
Four main risks facing businesses in 2019
Business risk comes in many different guises. While there is a certain amount of overlap betweenthem, they can essentially be distilled into four main categories:
Strategic risk
this is probably the principal type of risk in business and encompasses a lot of different elements. Strategy is essential in shaping the direction for any organisation but in a fast-paced business climate, things can change very quickly.
So for example, if you have introduced a new product to the market but it isn’t selling, this could be because a competitor has introduced something that meets the same demand, it could be that the demand isn’t there or that your product has been incorrectly targeted. The repercussions of this could be reduced turnover and profit or even put the survival of the business at risk. Organisations must be very mindful of this and utilising enterprise risk management software is a highly effective way of doing so.
Compliance risk
with more compliance regulation than ever before, and more complex requirements, organisations are deploying compliance software and IT GRC tools to stay on top of their compliance requirements.
But non-compliance really is a major risk to most businesses. Compliance changes all the time and a good example is the recent EU GDPR. This data privacy regulation means that any organisation holding EU citizen data must notify people within three days if their data is hacked, and they also must allow people to erase or move their personal information immediately.
This applies as much to an organisation located in the US or Africa as it does one in Europe, and some of the recent fines highlight just what a significant threat compliance risk is.
Operational risk
there is also a significant amount of risk for businesses that come from their own organisation. This could be a technical failing, an administrative error, failure to defend effectively against a cyber breach, employee theft or a whole range of other threats.
Anything that impacts a company’s core operations would fall into this category, and the implications of it could be reputational, result in a failure to fulfil customer expectations and much more. Some of this can be difficult to identify, manage and mitigate and showcases even further the need for enterprise risk management software to help.
Financial risk
all types of risk contain an element of financial risk too, but the financial risk category refers specifically to money coming into and out of the organisation, and the possibility of a sudden and unexpected financial loss.
Examples of this could be a major customer going into receivership when owing the business a significant amount of money, or for a company that has a lot of debt suddenly seeing a big change in the overall economy and lending interest rates. International trading – which is so widespread in 2019 – also comes with financial risk, with the fluctuating currency levels that might mean a company receiving significantly less revenue because the currency rate has gone down in that country.
How to mitigate against these risks
For any organisation attempting to manage and mitigate against these risks, enterprise risk management software has become an essential technology. There are many GRC software vendors available and bigger organisations will almost certainly be working with one of these, but the same might not be true of mid-market firms.
But they still have just as big a need for enterprise risk management software, which is why Oxial and our sGRC solution, is such an effective risk management tool. Not only is it affordable and straightforward to install, it comes with an unparalleled range of features and functionality to help an organisation to manage and mitigate risk.
It combines risk management into one overall IT GRC solution and its continuous monitoring of all risks and threats to an organisation gives complete peace of mind that the business is safe from true threat.
If you are interested in similar peace of mind, why not get in touch? One of our risk management experts is available here.
