Action-Oriented Analytics Can Help Manage Risk

Risk has always been an integral part of business, but as I’ve noted, companies deal with risk with varying degrees of effectiveness. A complex, ongoing process, operational risk management identifies risks to support successful operations of an organization, estimates the monetary and other measurable impacts if a risk event occurs, establishes methods for mitigating the severity of impacts should they occur, continuously measures the probability of a risk occurring within a relevant period of time, periodically reports on the risk environment to appropriate decision-makers and alerts executives and managers when risk thresholds are crossed. These important activities should make operational risk management of greater interest to executives in today’s volatile business environment.

Operational risk management also is a key reason for an emerging trend toward action-oriented IT systems. The easier availability of broad sets of corporate data and third-party data, along with the ability to process it quickly and explore implications in real time, makes it practical to expand the scope of risk management and improve the effectiveness of responses when risk events occur. Operational risk now can be managed more comprehensively – and the potential consequences mean it should be. (more…)