Integrated Enterprise Risk Management Solution for Optimized Business Performance
Until a few years ago, risks remained hidden within the walls of departments, and enterprises viewed risk areas independently. Modern Risk Management aims to promote the interconnectedness of risks and controls within business areas; after all, the emergence of a previously undetected risk can sometimes set off a chain of events, which branch out to different departments, generating even more risks. Hence, Enterprise Risk Management (ERM) solutions should be implemented to cover the whole hierarchical model, from top to bottom. The Risk Management systems and software in use should touch upon all the business segments so as to identify risks and events that span the entire organization.
The major areas to be looked into by an organization’s ERM processes are:
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Risk Management
Certainly, the first step is to look at the organization’s visible risk taxonomy itself.
The risk system should equip you with a comprehensive range of features that include:
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Interactive and comprehensive “Risk Dashboard”
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Integrated Risk library
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Risk Registers specific to the organization’s industry and operations
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Risk assessment and scoring capability
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Risk Heat Maps
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Control documentation
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Reports and notifications
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Key Risk Indicator capability
With the presence of an ERM platform the management can plan risk responses and eradicate duplication of controls. At the same, it helps in managing the risks threatening individual goals and business objectives.
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Regulatory Compliance
As regulations become more detailed, with new policies and guidelines, the task of complying is getting increasingly challenging; the lack of flexible ERM software could result in organizations making the mistake of trying to handle compliance manually. In the end, this depletes capital due to increased operational and compliance expenses. Additionally, inadequate data and information systems lead to gaps in compliance, and enterprises failing to meet regulatory expectations.
An ERM solution makes regulatory compliance an effortless task by:
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Automating and structuring compliance workflow
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Accommodating updated regulatory changes and internal controls using configurable tools
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Notifying regulatory developments
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Tracking, segregating and reporting non-compliant activities
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Providing an accessible repository on risk criteria and compliance standards
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Internal Audit Management
At first, Internal Audit used to be restricted to financial reports, but not anymore.
Internal Audit functions have expanded to include compliance, and now they even assess if organizational objectives and operational risks can be handled pragmatically.
An ERM solution can benefit Internal Audit management by providing features that:
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Integrate processes and organize documentation
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Manage, track and notify audit schedules
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Conduct stress tests and scenario analysis
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Perform gap analysis by aligning risks, controls and tests
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Manage a library to record audit findings and a configurable risk-based internal audit plan
Like risks, business areas are largely interdependent due to the overlapping of work functions. The implementation of an effective ERM software solution eliminates redundancies, aligns and prioritizes processes, risks, opportunities, strategies, individual goals and stakeholder demands to overall business objectives. In short, an ERM solution drives an organization to improve efficiency and drive up business performance.
Mohammed Nasser Barakat
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