Harnessing the full potential of risk management today means adopting a modern approach able to build partnerships across business functions to empower risk knowledge and “buy in”. Below, we examine the cross-functional collaboration and cultural change you can create by embedding modern analytical risk management.
This insight is based on guidance from the upcoming fourth installment of the WTW Outsmarting Uncertainty webinar series connecting the fundamentals of risk finance — from defining risk tolerance, to quantifying individual risks using analytics, moving on to developing a portfolio approach and; finally, how you can bring modernized risk management to your organization.
The upcoming webinar focuses on the empowerment and autonomy risk professionals can achieve with the latest advancements in technology and analytics. What outcomes are possible when you switch away from traditional risk management and elevate the role of risk management and your own contribution to organizational resilience and success?
Quantifying risks across the business is a crucial step in embedding the portfolio approaches to risk that characterize modern risk management. Doing this right will mean calling on diverse sources of data and insight, including historical data, industry benchmarks, as well as expert judgment from yourselves and your stakeholders to estimate the potential financial impact of comprehensive risks.
By having this nuanced approach to quantification, you can better evaluate the impact of one risk on another and consider correlations among risks, connecting diverse risk areas. Your earliest steps on providing a quantitative approach will begin to build a shared ‘muscle memory’ across the business units you’re working with. This will help deliver nuanced solutions that reduce risk and increase company value.
Positive feedback from this process can then motivate more business areas to engage.
When you embed modern quantitative risk management through working with other business functions, you're more likely to address their risks and uncertainties proactively rather than reactively.
For example, in the realm of cyber risk, partnering with the chief information security officer (CISO) allows you to assess and mitigate risks, evaluate potential business process impacts and identify viable breach scenarios together. This collaborative approach enables you to provide a holistic view of risks, helping leaders and risk owners like the CISO ‘see the forest through the trees.’
By bringing the risk function closer to the rest of the business, you can strengthen connections between different departments, functions and risk owners. This connectivity fosters collaboration and allows for a more comprehensive understanding of risks and their potential impact.
These connections can reduce risk efficiently and drive better business practices, yielding both short-term financial gains and boost longer-term performance. More business functions are then likely to understand the value of modernized risk management and more may seek out your collaboration to manage risks in their area.
Embracing modern risk management practices could see you working more closely with the chief financial officer, chief risk officer, enterprise risk management leaders, legal teams and audit and risk committees.
With more autonomy over smarter, modernized risk management you can drive smart decisions around evaluating major capital allocation decisions, expanding your remit and your influence on organizational strategy and success.
Many organizations are seeking better connectivity across their operations. Engaging in a modernized approach to risk management can serve as a powerful connector by delivering tangible financial benefits through insight and alternative perspectives. You can enable colleagues and members of the board to see their own risks within the broader corporate spectrum and empower you to embed a risk-forward culture in the business.
This growing connectivity can prompt more deep-seated cultural change capable of relocating risk management from being a ‘cost center’ to a ‘value generator’.
The most significant long-term contribution of modern analytical risk management practices is the ability to free up capital for business ventures that generate profitability.
Through proactive risk assessment, collaboration with other business functions and capital optimization, you can drive positive financial impact and enable different business areas to pursue new ventures with confidence. In this way, modern risk management can foster a risk culture that empowers organizations to do more, better, and achieve their strategic objectives.
Register now for How to boost financial performance by modernizing your risk management approach Tuesday 19 March 2024 or watch the earlier sessions in the Outsmarting Uncertainty risk finance fundamentals series on-demand.
For a smarter way to modernize your risk management and create more value from risk, contact WTW’s Risk and Analytics specialists.
