What are the benefits of enterprise risk management tools

As the world has never been more complex and uncertain, enterprise risk management has become critical for every organisation. This involves identifying, analysing, and managing potential threats faced by each one of them. To achieve an optimal approach, it is essential to have effective enterprise risk management tools (ERM) in place. These are crucial to the proper functioning of any company.

What are enterprise risk management tools?

Some companies only use Excel spreadsheets to plan and implement risk management. However, for multi-site and/or multi-activity structures, their best interest is to invest in a specialised and flexible ERM solution renowned for its quality. The only requirement is to have established a risk management methodology within the company before implementing any technical system.

In fact, 70% of Risk Management Information Systems (RMIS) users work within large companies, according to the latest survey by Ernst & Young and the AMRAE (Association for Risk Management and Corporate Insurance).

These risk management tools help companies to control various risks surrounding them to avoid, or at least mitigate, their impact. These companies can then adapt their processes, manage any type of issue, and acculturate their teams to this strategic challenge.

These solutions provide a comprehensive list of modules, including:

● Risk mapping: Risk identification, formalisation, evaluation, and ranking, monitoring of indicators, etc.;

● Risk control: Description and management of risk visits, monitoring of prevention, governance, and recommendation reports, etc.;

● Incident management (including financial): Centralised description and tracking of incidents, non-conformities, legal procedures, etc.;

● Compliance: Adherence to current standards and regulations;

● Internal control: Management of benchmarks, self-assessments; etc.;

● Audit: Definition and management of audit plans and recommendations, etc.;

● Personal data protection: Monitoring of internal policies, detection and resolution of incidents, etc.;

● Data analysis: Connection to risk data sources, automated analyses, result visualisation, etc.;

● Cybersecurity: Incident and security breach management, vulnerability scanning, etc.;

● Crisis management: Formalisation and use of Business Continuity Plan (BCP) models, support for crisis management, etc.;

● Economic intelligence: Competitive and technological watch, collection and processing of information, etc.;

Over the years, these enterprise risk management tools have evolved to adapt to the changing needs of companies. As such, functionalities pertaining to sustainability and Corporate Social Responsibility (CSR), as well as Artificial Intelligence (AI), have recently emerged.

Dirk Wegener, President of FERMA (Federation of European Risk Management Associations), believes in the future of digital tools in this field: “Two-thirds of respondents in the FERMA 2020 Risk Manager Report stated that they use innovative technologies such as data analysis, data visualisation, process automation and/or Artificial Intelligence. Such innovations enable Risk Managers to use large quantities of data, perform more analysis with larger samples, and extract increasingly useful information. As a result, they can better predict how risks evolve and identify where they are interconnected.”

The five benefits of enterprise risk management tools

As they oversee the entire risk management processes, these solutions provide many benefits not only for the various teams but also for the entire organisation.

Boosting efficiency

First of all, enterprise risk management tools (ERM) are a significant improvement in time-saving and operational efficiency. Experts report spending less time consolidating data and more on analysis. Thanks to real-time visibility and automatic alert systems, these tools undoubtedly make the day-to-day workload of risk managers easier.

Breaking down silos

These risk management software solutions also serve as an excellent means of reinforcing coordination between departments. Besides making the sharing of information easier, they help to harmonise processes and reporting across the company. This fosters coherence and fluidity in exchanges within the organisation, as different sites, services, or business units share their best practices.

Ensuring regulatory compliance

Risk management solutions also support companies in achieving compliance regarding regulations, standards, and laws in force. In this respect, 88% of experts state that features related to internal controls and compliance are covered by the implemented solution. This implies that as soon as a new rule emerges, companies can make the necessary changes more promptly.

Fostering a risk-aware culture

These enterprise risk management tools can also double as a means of communicating risk culture more widely within the company. Subsequently, this promotes awareness among each team concerning risk management, while also holding all stakeholders accountable. Everyone can then better analyse the situation, identify potential risks, consider the possible impacts, and accordingly, take clear measures to prevent them.

Improved decision-making

With the assistance of enterprise risk management tools, companies can reach informed decisions. This enables better control of information flows, obtaining more accurate risk assessments, and therefore, gaining agility and visibility for every customer to make the right choices.

Implementing a risk management tool is a standalone project for a company. After carefully selecting and implementing the solution, the process involves managing a significant change. Once adopted by all teams, it becomes an invaluable tool for risk analysis and decision-making, synonymous with performance, profitability, and the durability of business activities.