Up to 50 percent of businesses fail within the first five years. Some of the biggest reasons businesses fail include management issues, financial problems, ineffective business planning, and marketing mishaps.
How safe is your company from these types of risks? What types of risk management practices do you have in place? What is integrated risk management?
Keep reading to learn how to improve your decision-making and performance through risk management practices.
What Is Integrated Risk Management?
Integrated risk management (IRM) is the set of processes to help manage an organization’s risks. These are business-wide practices that contribute to the organization’s risk tolerance, security, and strategic decisions. IRM focuses on determining and evaluating risks in a wider view of the business strategy.
IRM is collaborative. It involves business leaders and IT working together. Attributes of IRM include:
- Assessment- identifying and prioritizing risks
- Strategy- enabling and implementing risk ownership
- Response- determining mechanisms to mitigate risks
- Communication- ways to track and inform of risk response
- Monitoring-implementing practices to measure the effectiveness of risk controls and mitigation
- Technology- designing an IRM solution
This term addresses the more complex risk businesses face with globalization and digital processes.
Why Businesses Need IRM?
Integrated risk management shows business leaders a clear picture of their risks. This helps them make more decisions at an enterprise level. They can then determine which risks to accept, transfer, or mitigate.
The leaders can ask more strategic questions on how risks can impact various parts of the business.
Digital processes, outsourcing to third parties, and globalization have various risks that impact an organization. Let’s take a look at each.
Companies search for ways to remain competitive and efficient with changing digital technologies. This includes mobile devices, the Internet of Things, Social Media, and data. Digital processes bring risks of data exposure, privacy issues, and other cyber concerns.
Outsourcing to Third Parties
Companies rely on third-party vendors to stay competitive. You need to share sensitive information with these vendors. You face risk because if something goes wrong it can ruin your reputation.
No need to have control over the third party. You also face cybersecurity threats with their systems.
The worldwide economic growth has sparked new markets and consumers. It’s easier to expand than ever thanks to the Internet. There are operational risks with geopolitical risks, currency swings, natural disasters, and more.
Ready to learn more about integrated risk management solutions? There are four key areas to address in your integrated risk management plan.
- Build a risk-aware and engaged culture
- Align cybersecurity with your business strategy
- Report to evaluate the performance
- Integrate risk in all business strategy discussions
The full scope or risk may be too much to manage by hand. You may want to power your IRM with technology to interconnect these challenges.
Protect Your Business Today
Business is changing daily from pandemics to cyber attacks to consumer behaviors. It’s important to manage your risks to keep afloat. With the answer to the question “what is integrated risk management,” you know how important it is to protect your business.
Looking for more business advice? Check out more articles on our site for additional business advice and insight.