In this week’s blog, we’re sharing insights based on our latest interview with Suneel Sahi. He is the VP of Marketing at Metricstream, the market leader in GRC. They have been around for over two decades while adding value to their customers in reg reporting, understanding about all their controls, their cybersecurity and ESG.

Suneel focuses a diversity of areas including Financial Services, GRC Strategy and Marketing in the capital markets, focusing on M&A, private equity, operational risk & financial crime and specialising in cybersecurity, cloud computing and AI.

Our topic for today is the upcoming trends around risk management and cyber risk quantification in terms of interconnectivity. Regardless of your industry or your position as a risk manager, at least a few of these trends will be a topic of your general meetings with the rest of the board. In general, we are seeing four main themes coming up:

Theme 1: Risk Is Interconnected

The first theme that we often hear about is the interconnected volume and velocity of risk — essentially meaning that no risk topic is exclusive from one and other and that they affect each other in some way. Same way, it will also not affect only one industry or region, but certain events can cause a ripple effect — and we can see this happening right now.

For example, if we take the war between Ukraine and Russia as an example, from a business perspective the initial risk we see is the economic risk affecting many countries in the region. But on top of that, depending on how businesses handle their actions during this situation, reputational risk can come up as well. There is also a big discussion about cybersecurity, and cyber risk. Lastly, operational risk, enterprise risk, systemic risk, ESG, and so many other risks do come up and these all need to be considered as a whole. The trend is that all risk is connected and you really don’t have one risk that doesn’t affect the other risks.

Theme 2: Rise in ESG Risk Awareness

ESG is one of the rising trends in the risk management and compliance space. Stakeholders want to understand your environmental, social, and governance risk and what your framework looks like. Explaining their purpose and aligning their business with ESG factors not only can bring more profitability but also a great impact to help the environment or society. That’s adding a lot of value to their business and attracting interest from shareholders.

As it’s all about interconnectivity, alongside ESG, it’s important to be aware of other risks organisations can be exposed to, such as the physical or transition risks. Physical risks are related to the physical impacts of climate change whereas transition risks are risks related to the transition to a lower-carbon economy. A well planned ESG framework can help prepare against such as well.

Theme 3: Peripheral Vision & Systematic Risk

Another theme that is coming up is having a peripheral vision of risk and also systematic risk. Interconnectivity of the risk doesn’t only apply to connection between different risks but it also means risk has become more connected to other systems or functions over the years. We see that risk is in the CRM, ERP, financial systems, — and basically everywhere, and these have to be well connected as well.

So from a systems perspective, as these systems are coming together, we’re also hearing more about AI and machine learning. These technologies are helping this industry to look at risk and bring it together. And smart technologies are letting people automate, find efficiencies in the process. When you embrace integrated risk, these AI tools work wonders and also bring risk to front lines. It can also help the organisations thrive in a risk environment, and look at it from a strategic advantage point of view. If you can have an agile system and workforce, you can make sure the risk is working for you to create opportunities and make sure you’re making the right risk decisions.

Risk is not a bad word. In fact, companies that understand how to manage risk everywhere and then embrace risk can ultimately thrive and become much further through the journey. If you think about managing risk, you need to have a good report system and understand the internal control, and seek to bring things together by moving away from being a silo.

Theme 4: Rising Cyber Risk Trend and Quantification

When we look at the risk landscape, cyber risk seems to be the number one risk at the moment. Although cyber risk has been around for quite a while, the rise in remote working and other additional factors have made significant changes in how this risk has been managed. One of the big aspects we’re hearing about this now is how you can quantify your cyber risk — instead of treating it like a dashboard with green, yellow, red indicators to decide on the steps you will take.

Lately, we have been able to put a monetary value around certain risks, which can allow your board to make much better decisions with the board. You can get reports, which show you actually your risk exposure is a certain amount. This should help risk managers to also explain C-Suite and other shareholders to explain what they’re doing or why they might need investment. As this is now it’s becoming an essential, organisations need to really understand how they quantify risk regardless of the size.
This is also heavily connected to data — and you absolutely require a great data management system. As data is this critical, you need to make sure what’s coming in is enriched, is validated, sorted, organised and clean. If you’re working in a silo system, this becomes twice as hard. That’s why technology really brings things together and helps greatly in risk management.

Takeaway Points

There are a lot of elements to consider when it comes to different risk trends and a lot of things to adapt into. The great part is, you don’t have to do this alone as a risk manager. Risk managers should be communicating these trends or challenges to the other parts of the organisation and make sure all are connected. Working with your colleagues or executives, or even being part of a community gives you access to a bigger, broader perspective or insight than just doing everything yourself.

Closing Words

For now, this sums up the key points of our interview. As the Global Risk Community team, we once again thank Suneel Sahi, for providing insights on the trends and main themes around risk management, as well as explaining crucial aspects such as interconnectedness or quantification.

More information about this topic is available in our original interview, which is accessible here.