3 Emerging Data Hazards in Enterprise Risk Management
Enterprise Risk – large or small, macro or micro, planned or unplanned, managed or unmanaged – it’s a part of doing business. Now, the concept of enterprise risk demands new attention from finance leaders as the risk and return implications of choices that companies make can be critical to driving a growth agenda. Complexity, globalization, and digitalization are just some of the elements at play in the risk landscape – and data is becoming a core part of understanding and navigating risk.
Once a hill, global enterprise risk management has become a mountain, and the ascent is not for the unprepared. How do modern finance leaders view, navigate, and manage enterprise risk with data? Dun & Bradstreet surveyed global finance leaders for the study “Reimagining Enterprise Risk: The Finance Mountaineer’s View of the Enterprise Risk Landscape” and found they face big challenges on the path to the summit.
The good news? Most finance leaders are using data to manage and understand their greatest enterprise risks. The bad news? The data they’re using may not be the right data – and only 15% of finance leaders are confident in the quality of the data they use to manage risk.
Here are the top three risk management trends that emerged from the enterprise risk report:
The Enterprise Risk and Strategy Disconnect:
Finance leaders are using data and running risk management programs, but over 65% of finance leaders say there’s a missing link between risk assessment and strategy. Thus, there is an immediate need to better connect data with process, strategy, and behavior.
The Risks of the Use and Misuse of Data:
Up to 50% of the data used to manage modern risk is disconnected. Only 15% of leaders are confident about the quality of their data. With that low reported confidence, finance leaders must also be working to better understand their data and how and where it’s being used.
Few enterprises feel confident that they are fully connecting the dots between data points, entities, people, and teams. Only 20% of finance leaders say the data they use to manage risk is fully integrated and shared. Data use needs to be holistic and integrated to manage risk, without risk.
Even when data is available to help prioritize and understand enterprise risk, companies are struggling with the magnitude and disparity of the data they manage each day.
Video: How to Avoid 3 Emerging Hazards in Data Risk Management
Reaching the Summit: Enterprise Risk Solutions
It’s never been more important to prepare and have the clear vision of an expert “risk mountaineer.” Every finance leader needs a data-infused compass and an analytics-drawn map to guide their team in the right direction, up the right mountain, and with the right equipment to reach the summit.
Taking an integrated approach to moving companies “up the mountain” can be tricky. To scale risk effectively, finance leaders need to identify the right growth journey for their company and make a plan to get there, preparing for and even optimizing the risks they’ll face along the way. Modern risk’s complexity demands that data be used to identify, navigate, and decide.
And despite the challenges involved, most finance leaders are taking proactive steps to integrate data into their decision frameworks and to internally formalize their risk management processes. These modern finance leaders know that data is important to their strategic endeavors, yet they struggle with the nebulousness of emerging risks and the added unknowns of human behavior.
Finance can play a pivotal role in tackling enterprise risk with data by helping the organization to understand where relationships exist and how to navigate them. Risk navigation, like mountain climbing, takes leadership and planning. Armed with the right business insights, the right strategy, and the right team, finance has the potential to scale new heights – by reimagining risk as an opportunity for data-inspired leadership.
Infographic: Benefits of Enterprise Risk Management
Ready for your ascent? Download the complete study to read the survey results and learn more about how finance leaders are approaching data and enterprise risk management.