From Traditional to Proactive Enterprise Risk Management
Business leaders and executives are continuously looking at ways to minimise vulnerabilities and threats to their organisations. Enterprise risk management (ERM) has emerged as the universal methodology that deals with both internal and external risks affecting business.
As the needs of enterprises grow to accommodate the rapid changes in the global marketplace, so is ERM evolving to provide a more intuitive approach to the emerging risk landscape and enable businesses to respond in due time to any identifiable risks.
Proactive risk management can anticipate pressures and threats to business operations and address the complexity of risk factors. It involves identifying emerging risks early, determining how they should be prioritised, and responding to them quickly and effectively.
Proactive ERM requires a shift in risk management from the traditional reactive approach of measuring and managing risks as they occur to a dynamic response to risk based on continuous anticipation and identification of risk on a wider scale.
Traditional ERM proposes the optimisation of a risk strategy based on previous measurement, monitoring and reactive responses, which leads to a conventional ‘boxed-in’ method to face enterprise risk.
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The dynamic ERM strategy considers the organisation’s ability to respond to emerging risks and adapt in time. Not every risk is a predetermined risk or a ‘one-size-fits-all,’ which is why agile risk management is preferable to the conventional method in fast-moving markets where reliance on known risks can make it difficult to spot and control new threats.
Furthermore, the process of establishing context, identifying, and quantifying risks becomes vital in agile risk management to assess and prioritise the level of risk importance and generate actionable steps to monitor, review and exploit emerging risks.
It is also important to integrate these emerging risks and align them with the organisational strategy through the implementation of a more agile, flexible and integrative risk management solution that responds effectively to risk within the evolving risk landscape.
That said, proactive risk practices and conventional methods assist organisations to better prepare for the unexpected, and most organisations should derive value from a combination of both in their enterprise risk management system.
The XGRC Software range of integrated system solutions is designed to meet all the requirements of your organisation’s Governance, Risk Management and Compliance (GRC) strategy, from planning to monitoring and reporting.
Enterprise Risk Management (ERM), part of the XGRC Software product range, enables the methods and processes used to manage enterprise risks and seize opportunities to achieve your strategic objectives.