Today’s business environment is rapidly evolving, which means that a lot of pressure is put on companies to innovate as fast as they can to stay ahead. The drawback is that everything happens so fast that risk assessment often gets overlooked.
Yes, it is essential to keep a company up to date, but this won’t do any good if the necessary measures are not taken to do it right. That’s what risk professionals are for; they assess both the rewards and the risks in order to choose the right method to adopt new technologies.
Risk managers are often isolated inside their organizations, which means that company’s innovators or disruptors don’t actually turn to risk managers for guidance or advice. This is due to the fact that risk professionals are perceived a certain way and people who come up with new projects and ideas expect for risk managers to rain on their parade and go on a tirade of why the new technology shouldn’t be integrated.
However, risk professionals have become aware of the image that members of their own organizations have of them. A poll made by Marsh, an insurance broker, showed that 91% of risk professionals agree that it is essential for them to be able to understand technology innovation in order to stay relevant in the industry.
Curiously enough, 67% of risk professional claim that the company they work for hasn’t established plans and procedures to assess new risks or they’re not aware of it.
In another survey conducted by Marsh and the Risk and Insurance Management Society, over half of the respondents claimed that the company didn’t undertake risk assessment when disruptive technologies are on the table. The report concluded that this lack of attention to the risks that can accompany the integration of disruptive technology to an organization should be considered unacceptable.
A comprehensive assessment of the risks that are involved with the use of technological innovations in an organization is a useful tool to understand the company’s changing risk profile.
It is necessary for innovators to work hand in hand with their risk team and study every aspect; from legal, finance, compliance, to government relations and any other relevant aspect in order to assess the risk of the new technology from all angles.
The most common challenges with this kind of collaboration involve structures reports, conflicting priorities, and bandwidth, which is why cross-functional collaboration is critical. Recently, the main focus when it comes to assessing risks relies solely on data breach and privacy risks, which leaves little room to assess other equally important risks.
The range of risks that can affect a company once technology innovations are involved is very vast, and companies have to do their best to assess as many important risks as possible, not just cyber risks such as data breach and privacy.
Risk professionals today have to find solutions and alternatives that allow companies to innovate while still balancing risks in a successful way. To accomplish this, it is necessary for them to break down organizational silos and ramp up discussions.
Risk professionals live in a “disrupt or be disrupted” environment, so it’s vital for them to take the initiative to understand, assess, and manage the advantages and disadvantages of technology innovation.