Risk in the cloud
Want your risk management to become a business driver? Start with the cloud.
By James Francis, first published on ITWeb.
Imagine you are travelling down a road in your car. You need to reach your destination by a certain time, but the storm clouds looming up ahead may have a different outcome in mind. Then it happens: a heavy torrent of rain comes crashing down, cutting your vision to what is just ahead of you. What do you do?
Those who have travelled the road before have an obvious advantage. But so do those who planned, especially if they could recognise the storm before it began to culminate. In fact, because they could plan ahead, they didn’t have to avoid the storm. They might have even found ways to benefit from it.
Anticipating that storm is a question of seeing risk. Risk, all too often treated as the company pariah – the prolific popper of bubbles – is actually one of a company’s most valuable assets. Risk is about intelligence: the more you know, the better you understand and the more effectively you can act.
“Companies that appreciate risk also tend to excel in their planning and intelligence,” said Riaan Bekker, thryve’s Force Solutions Manager. “The components are the same: both risk and planning require the gathering of insight, the formulation of scenarios, combining them, and devising strategy based on the results. Risk is an essential part of strategic planning. At least, it should be.”
Yes, it should be – so why isn’t it? Why is risk still the begrudging due diligence exercise, rolled out once a year or so to satisfy the EXCO with a report?
Risk management is hard to coordinate. The necessary data is spread across the company, isolated among departments and people. This has to be brought together, then presented in ways that the relevant audience can appreciate.
Contrast that with finance, which operates along a similar vein. It also requires data from across the company, collated and presented in a suitable fashion. The difference is that companies are trained to use finances as a measuring stick. Business people are also routinely educated to interpret financial results.
Risk is not. Few are trained to understand and consume risk metrics. Instead specialists are hired for that job. The result is that the intelligence locked inside risk is being fettered away on box ticking when it could be as impactful as finances.
There is another reason why this is the case: risk systems are not pervasive, because they are too expensive. The kind of technology required to run an effective risk intelligence gathering operation is expensive and heavy duty. At least, it was. Today you can have your risk cake and eat it, thanks to the cloud.
“The integration of risk platforms into business applications has become very seamless and affordable. If a company already runs some type of encompassing application, such as an ERP, it’s very easy and quick to connect a risk analysis service to it, without any of the upfront overhead of new servers or other upgrades. This allows risk to become part of the company feedback loop, gathering all the right data and then presenting the results to whomever in whatever fashion they desire.”
So, goodbye annual reports, hello real-time details on the CEO’s tablet – and through significantly lower upfront costs than the usual spending requirements that often sink technology proposals. Cloud means that data can be gathered and presented in many different ways, delivered to many different devices. It is easier to adopt, not to mention cheaper and faster. It can be introduced piecemeal to sections of the business, and it plays straight into mobile devices and single-pane culture.
The introduction of cloud makes some companies nervous, particularly when it concerns sensitive data. Yet this is a misunderstanding of what cloud offers. It is true that there are unscrupulous vendors who are not upfront on how a customer’s data is stored and managed. But a good service provider will store customer data responsibly and safely, adhering to regulations that ensure no data laws are broken. They should be able to tell a customer where their data is and offer location choices. A good cloud services provider matches their offerings with the customer’s data needs – and are honest if they cannot.
Ask questions and demand answers, but don’t shy away from it over unexplored concerns. Avoiding cloud is not a good choice for any progressive company.
“I have been in the risk software game for a long time, selling hefty systems that cost a lot and required months, even years, to implement,” said Bekker. “None of that holds a candle to what we are seeing in the market now. Cloud is killing it: it is cheaper, faster, better integrated and the results speak for themselves. It used to take months and many meetings to get such a project going. These days a single POC can prove the value.”
The power of cloud integration is unchaining risk management from the annual report dust-off. Risk can become a living organ in company strategy, without disturbing the various ecosystems and silos spread across the business. It’s how you prepare for the storm and even make the storm work for you.
Or you can just wait on the side of the road for that annual report.