7 Essential Features of a Best Practice Risk Management Tool

7 Essential Features of a Best Practice Risk Management Tool

Choosing a software for your business is not as simple as buying the office furniture or restocking the stationary cupboard. You need to ensure the features and functionality of the software serves your organisation’s needs.

In today’s dynamic business environment, there is a growing trend towards Risk Management and aligning risk to strategic goals and operational priorities. Therefore, it’s imperative that organisations invest in a good Enterprise Risk Management (ERM) software to assist them with identification, assessment, control and mitigation of risks to give managers, executives and key stakeholders regular visibility to guide decision making. But what’s really considered a “good” ERM application?

When one finds themselves in the second stage of the Consumer Decision Making Process, (i.e. the ‘Information Search’ stage), the key information would be what triggers the best solution to your problem. In this case, that problem would be purchasing a Risk Management software solution.

7 Essential Features of a Best Practice Risk Management Tool

As risk subject matter experts, we’ve put together seven features of the ‘Best Practice’ that a Risk Management Tool should have.

 

1. Adhering to international standards

It’s very important that the ERM application you’re looking to purchase complies with international standards, such as ISO 31000:2009, which provides the principles, framework and processes to manage risks.

This standard is not specific to one particular industry, sector or organisation size, but can be applied for any nature of risks. Moreover, the ISO 31000:2009 standard can be applied throughout the life of an organisation and across a wide range of activities, including decision-making, operations, functions, projects, products and services.

Having an ERM system that adheres to the ISO 31000:2009 standard, ensures the design and implementation of the Risk Management plans and frameworks do consider the different needs the organisation. This includes the need to increase the likelihood of achieving objectives, improve the identification of opportunities and threats, while also effectively allocating and using resources for risk treatment.

2. Link to organisational strategy

If the ERM application you purchase doesn’t integrate with the strategy your organisation has planned to implement for the upcoming financial year, it implies that you won’t be able to align Risk Management to your organisation’s strategy, thus blinding its future. Assessing all potential risks or threats to your defined strategies, and ensuring the right measures are being taken to control or mitigate them, will support the long-term plan of guaranteeing the success of the organisation’s vision.

Thus, it’s critical that Risk Management is practiced across all corporate plans and strategies. Simply put, the Risk Management system in place needs to align with the planning and reporting framework of your organisation, allowing you to track all your risks individually, against your strategic plans.

3. Configurable frameworks

Every organisation operates differently, and will have their own way to manage risk. In order to manage organisational risks, a proper Risk Management framework needs to be in place. These frameworks would also naturally vary depending on the organisation and its different risk exposures, classifications and appetite.

Effective ERM systems should provide flexible Risk Management frameworks, or the capability to create your own frameworks, to enable the levels of customisation necessary to meet the individual needs of a specific organisation. In addition, a fully tailorable framework would mean that both current and future risks processes can be incorporated into the system, regardless of potential organisational changes.

4. Electronic reminders and notifications

Reminders and alerts are a key feature of any ERM application. The whole purpose of having a Risk Management system is to manage risks better and more efficiently. In order to do this, it’s absolutely necessary that whenever a risk is identified, a control is set or a treatment is activated, the relevant parties are immediately informed so that they can take necessary action.

5. Allow executive level performance management of risks

In order to govern how Risk Management operates within your organisation, accountability needs to be set up for individuals and departments, where managers at different levels and departments will be able to view risks relevant to them. Senior executives should be able to have a broader view to compare all risks against different departments and hierarchies.

In simpler words, another essential feature of a good ERM software will be, the competency to provide snapshot views of your risks and capabilities, allowing to compare them against different levels of hierarchy.

6. Mobile friendly

Nowadays, most spend less time at their desks. Not only are we constantly on-the-go, flexible working arrangements mean we can, and do work from just about anywhere. As such, today’s ERM software must be mobile friendly – ideally, via native applications.

7. Reporting

The last, but not least, necessary feature of a modern ERM solution is the ability to generate timely, insightful reports. Data presented through the form of reports is vital for efficient risk and performance management. Therefore, your ERM system should provide both a fixed set of reports, as well as allow configuring reports to tailor the presentation of risk related data to individual needs.

Additionally, the reports need to be available in multiple formats in order to accommodate different management requirements.

Looking for a risk management software that helps you manage and review risks efficiently?

Lakshanth

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