Accomplishing a secure business environment—meaning a work culture backing proactive risk management and accurate risk decision making—is the stepping stone toward reaching the risk management goals of an organization. To achieve it, you need an efficient enterprise risk management (ERM) software system, which looks into your business intricacies.
There are many ERM software products available in the market, but you need to pick out the one solution that facilitates the ERM requirements of your enterprise. The ERM software you choose should enable you to convert risk intelligence to support the development of your decisions.
Here are the crucial features you should be looking for in your ERM software:
Risk management architecture plays a major role in integration. There is plenty of data pertaining to risk identification, assessment and management, documentation, operations and execution, testing, audit management, report generation, controls and solutions, and IT support. They have to be synchronized under one platform. An application that provides a central source for risk documentation, which includes risks, processes, entities, controls, tests and results, is ideal for a well-coordinated work setting. Boards and management largely rely on these reports to make business decisions. Only an integrated ERM platform can provide accurate data to support decision-making practices.
Software that embraces plan and strategy
Adopt an ERM tool that is designed to embrace business goals and objectives, regulatory norms, workflow, specific industry functions, and the best practices of your organization. The design should be equipped with automated monitoring and compliance report generation, as you need to be prompt in identifying, analysing and responding to risks.
Event tracking and point of origination
Event tracking wins a significant brownie point for ERM applications. You can use loss event tracking to track loss incidents and near misses, record amounts, and identify root causes and ownership. It helps in validating the risk profiles of business units.
An ERM platform should be capable of taking you through the event sequences and timeframes, and should independently detect the source of risk origination. It should be programmed to expose the vulnerable areas of an organization and pinpoint risk triggers and catalysts. That enables you to carry out risk mitigation treatments with a definitive approach.
ERM software should be programmed to examine the business environment, from eminent past events to changes in the current market, for an extensive record of scenario analysis. Impending risks based on real-time events should be charted for analysis and mitigated.
The platform should empower you with information on expected future losses for individuals, each business unit, a group of entities, as well as the entire organization.
Risk and control self-assessment
The ERM platform should enable all business units to participate in risk and control self-assessment processes. A comprehensive operational risk profile of the enterprise can be derived using this approach. Identifying and evaluating risks and assessing the controls are important for risk management. The solutions should follow up on control measures and evaluate their success or failure rate. Thus, a risk and control self-assessment feature helps you enhance the control environment.
Having a risk library facilitates future efforts for risk identification.
Key risk indicators (KRIs)
Your ERM application should have the ability to set KRIs taking into account the risk appetite and risk threshold of the enterprise.
Risk landscapes are changing constantly. New risks are emerging out of the latest tools and technology used by enterprises. This means there will be fluctuations in risk profiles, risk appetite, KRIs and other disciplines. A flexible ERM solution is indispensable in the current business scenario. Moreover, the deluge of more and more regulatory reforms and policies can also be incorporated if the software solution is built with a flexible approach.
Purchasing the most expensive or the best brand’s ERM software solution may not help your risk management objectives. Look at features in detail and check how they fit with your risk management framework and assessment techniques.
Mohammed Nasser Barakat
Partner at CAREWeb and BRS Service Line Leader for the ME region