Part 3 of 4: The Future of Risk Management
Where do you see your organization in the future? Most leaders are well-equipped to answer that question when it comes to the next month, the next quarter, and to a certain degree, the next year. Strategies and plans are carefully deliberated over, funding is allocated, and teams are positioned to execute.
It’s not that business leaders lack vision. Leaders are typically very passionate about achieving specific strategic goals. Yet, for finance leaders in particular, burgeoning complexity in key responsibilities has made it quite difficult to do anything but manage for the short-term and the most immediately pressing deliverables. Alongside this expanding complexity in core business functions such as financial reporting and governance, finance leaders are also increasingly being looked to as respected sources of strategic input for their businesses.
Taking a Holistic Risk Management Approach in Finance
The charter to manage risk isn’t a new one for finance, but risk management is one of many disciplines within finance’s remit that has burgeoned in complexity. Risks such as cybersecurity threats, data management challenges, trade policy shifts, economic volatility, and decay in customer payment viability are just a small listing of risks that businesses today face. Because risks are no longer confined to unique silos, a more holistic, connected approach is now needed from finance leaders to help their organizations manage risk both today and tomorrow.
In April 2018, Dun & Bradstreet conducted a risk management study of thousands of finance leaders across industries, functional roles, and business sizes to comment on the risks they’re facing today, how they’re using data to manage that risk, and how they see their organizations adopting emerging technologies and tools.
The study found that, in spite of the promises of emerging technologies and tools, finance leaders are struggling to take a data-inspired approach to risk management, and many rate their own ability to manage and monitor risk as particularly challenging. Fewer than 20 percent of finance leaders are using machine learning, automation, artificial intelligence, or blockchain to manage risk. Nearly half are collecting and managing data in silos, and only 20 percent report that they have the ability to share data in an integrated fashion to manage enterprise risk. Monitoring risks within the customer, partner, or supplier base ranked as the #1 risk facing finance leaders. It’s clear that modern data management practices haven’t yet reached full adoption. Investments in resources and strategic direction are necessary to ensure organizational risk is managed effectively with data and insight as strategic guides.
Perhaps the greatest risk finance leaders face—and indeed all business leaders—is that their time, their energy, and their creativity are invested so heavily in their todays and not their tomorrows. Indeed, managing through today has become such an arduous task that it is often all we can do to keep pace. Today, finance leaders are being asked to think about alternative approaches to everything from how their operations are run to which investments to make. Many are conducting due diligence to understand how their organizations might adopt modern technologies and tools.
Finance Transformation for Profitable Growth and Risk Management
Because many of the functions and processes within finance are highly complex and require nuanced approaches to manage, it can be tempting to address this finance transformation in piecemeal ways rather than holistically. A short-term focus on individual processes or quick fixes to broken systems won’t necessarily prepare the organization for future growth or effective risk management.
The time to make time for the future is now. The finance team has the ability to lead the charge on both the front and the back ends of the business, guiding their organizations toward profitable growth. Tomorrow is when the decisions that are made today will help steer the organization toward greater heights or put the organization at increased risk. It doesn’t pay to invest in technology, tools, or talent without first imagining what the future should look like.
There’s never been a better day than today to change how the future looks tomorrow. Download Dun & Bradstreet’s 2018 Risk (R)evolution Study below to learn more about seizing these opportunities.