The risk management process is inherent in any project. When we develop a plan, we think about what can go wrong and devise ways to minimize problems. Therefore, the process itself needs to be simple and effective to avoid complexity as a risk enhancement factor.
Although, described in this way, the risk management process may seem difficult to elaborate, it can be easily understood. Therefore, we will explain it focusing on the impact of new technologies on its execution. Thus, we will be able to transmit practical and current alternatives that will greatly facilitate your work.
The current scenario of risk management
Before starting the steps properly, it is essential to contextualize the current scenario. This is because the new technologies bring numerous benefits, but also add new risks - mainly in their pioneering versions, when they have not yet been sufficiently tested.
Security risk is among the most influential today. The phrase even sounds contradictory, since security has the function of avoiding problems. However, the current availability of data, for example, exposes the privacy of each of us in a way unthinkable a short time ago.
Managing this type of risk is extremely important and does not only affect large companies such as Facebook, WhatsApp and Google. It is difficult to design a business that currently does not maintain data about its customers and suppliers, in most cases in the cloud and vulnerable to some extent.
Still, a KPMG survey on the topic in 2017 revealed that, in the technology area, 72% of companies only allocate a risk team after a problem has occurred. Almost half of the respondents still claim that they use devices and applications without any risk assessment and 50% of companies use obsolete data.
It is understandable that it is so. After all, the urgency for agility above all, in the digital transformation, is evident and the risks are a hidden possibility. That is precisely why the risk management process is important. It highlights the possibilities of problems, classifies them and determines the prevention and correction procedures.
The stages of the risk management process and the technology
- Risk identification
Although the need to start relating risks is elementary and, as we said, it is a natural activity in the elaboration of projects, this first stage is one of the most impacted by technology and digital transformation.
Features like Big Data, Artificial Intelligence (AI) and the Internet of Things (IoT) are changing the way we collect data and predict problems. Big Data expands the source of information, AI automates the collection and the IoT monitors different occurrences, such as the increase in temperature in equipment and the lack of items in stock, for example.
The conventional process of raising risk information with those involved in the process remains important, but it is now possible to go further and, at the same time, confirm the team's suspicions and fears with the help of technology.
- Risk analysis
With the related risks, it is time to analyze them seeking to identify the extent to which each of them can occur. Obviously, we are not talking about a guessing process and, many times, not all variables that can influence the occurrence of a problem are available. But with the definition of varied metrics it is possible to obtain a very reasonable forecast.
Currently, a large part of this process can be automated, and the analysis can be expanded. The algorithms are being developed with an increasing capacity for intelligence and it does not make sense to limit yourself in this field. Even statistical analysis programs have evolved a lot and are much more accessible.
- Prioritization of risks
Based on the analysis, it is easy to relate the risks according to the characteristics of high, medium or low. The most significant are those that can interrupt your project or imply high costs. At the same time, it is also essential to determine those who need a more immediate response.
In this respect, technology has helped with more advanced and effective forecasting capabilities. The Business Intelligence is based on rich and available real - time data in various sources.
- Definition of the person responsible for the risk
Any task that is not assigned to a specific person can be done by anyone. At the same time, everyone is likely to expect it to be performed by someone else. Risks are no different. Assign a person responsible for each risk, preferably according to each person's ability to prevent the occurrence of that problem.
But the involvement of each employee cannot depend only on an order. He needs to assimilate the culture of prevention and availability of dedication. Automating some of his tasks is crucial for him to have time to maintain his focus on more strategic actions, such as risk management.
- Risk response
The answer to risk involves questioning its positive use. After all, some problems can be explored to improve the project, redesigning procedures or applying incremental innovations.
Here, perhaps, we have the greatest practical influence of technology in risk management. This is because this positive response to risk is one of the characteristics of technological solutions. Data released using robot software (RPA), for example, prevents human errors. So, it is with all types of automation.
- Risk monitoring
Monitoring is an ongoing procedure that needs to be based on metrics. The person in charge must accompany them as an airplane pilot observes the aircraft panel. Variations in some registries can give clues to increase the probability of risks and allow proactive actions.
To conclude, it is worth mentioning that the risk management process is no different from many others. To put it into practice, it is essential to create an organizational culture that makes its importance clear, as it depends on people to function. Unsecured profit is never sustainable indefinitely, as small problems can take on large proportions. And who wants that for your business?