In the Post-COVID landscape, we need to better understand risk, and how we can adopt resilient team-based solutions to best navigate it.
The global pandemic has exposed devastating failures in company risk management across the globe.
Many companies and corporations who thought they were ready – and should have been ready – discovered too late that their risk and compliance systems amounted to little more than guesswork. And they guessed wrong.
Yet other organisations have risen to the challenge. Calling on intelligent Enterprise Risk Management (ERM) frameworks, they have successfully responded to every new – and often unprecedented – issue as it arises.
Intuitive, easy-to-use and collaborative team-based tech solutions can clearly help businesses of every size to achieve effective governance and risk management practices, no matter what crisis befalls them.
Knowing the unknowable
We don’t know what we don’t know. Yet we probably know far more than we think.
For instance, it was inevitable that some kind of major shockwave would come along to blast open the complacency so prevalent in the global business world.
The COVID-19 pandemic has exposed systemic cracks in traditional forms of risk identification, assessment and board review.
Our own extensive research over the past year has exposed several common areas of non-compliance, many well-entrenched before the first COVID-19 reports surfaced.
Having discussed risk management with hundreds of business leaders, the four key areas of non-compliance emerge as:
- Communication fail. It’s impossible to achieve full risk management and compliance if key people are left out of the loop.
- Lack of collaboration. Without real team input, feedback and consultation, compliance will be ineffective and incomplete.
- Poor information. Companies lacking a comprehensive risk library are ill-equipped to identify, define and prepare for imminent threats.
- Old or no technology. Whiteboards, sticky notes and clunky admin are no substitute for smart software systems everyone can use.
No wonder the pandemic has played havoc with company governance worldwide.
Why take the risky approach to risk management?
In January this year, the annual Allianz Risk Barometer placed cyber incidents at number one in the Top 10 Global Business Risks.
As boardrooms across the world lit up with hot security discussions, number two slipped under the radar – the ominously named ‘spotlight on business interruption’. When 37% of respondents nominated this one, they couldn’t have known a pandemic was slowly unfurling. They did, however, understand that we live in an increasingly unpredictable world – one which demands tighter, smarter and more effective governance and compliance than ever before.
Even without COVID-19, the barometer identified a raft of other formidable business risks.
The environmental juggernaut of climate change is careering towards us, gathering pace. Brexit, trade barriers and modern slavery legislation are weaving a complex regulatory web. A growth spurt in artificial intelligence is ringing alarm bells for companies unable to keep up with technological demands.
We believe an informed, inclusive and realistic approach to such challenges is essential to help organisations cope with an uncertain future.
This involves a combination of user-friendly technology and a truly collaborative, multi-level approach to risk management.
Protecting people and livelihoods
A mature approach is key to survival and prosperity in this new, emerging world. Quite simply, companies need to grow out of complacency, and into a more insightful, productive method of governance.
Constructive discussions with colleagues are critical. Consensus decisions arising from team input ensure that risk management is based on valid individual and collective risk perspectives.
It’s time for governments, enterprises and service providers to future-proof their organisations and ensure they can carry out three vital functions – looking after people, protecting sensitive customer information and delivering reliable services. No matter what the circumstances.
This requires effective crisis management, full consideration of financial resources, leveraging of tech innovation and top-to-bottom connections.
Inadequate risk assessment and management has resulted in lost lives, shattered businesses and organisational failure.
The consequences of getting it wrong are too great in a post-pandemic world where higher ethics, standards and regulatory expectations are embedded in digital transformation.
Anthony Stevens is founder and CEO of 6clicks, and author of Chasing Digital: A Playbook for the New Economy.
Peter Deans is the former Chief Risk Officer for the Bank of Queensland founder of 52 Risks, director of Notwithoutrisk Consulting and The RegTech Association.