What is risk management and why is it important?

 Risk management process is identifying, evaluating, and controlling threats to an organization's capital and profits. These risks stem from a variety of sources, including financial insecurity, legal liability, technical issues, strategic mismanagement, accidents and natural disasters. 

Risk management also examines the relationship between risk and its wider impact on the strategic objectives of an organization. 

This holistic approach to risk management is sometimes referred to as enterprise risk management because of its emphasis on predicting and understanding risk across the organization. In addition to focusing on internal and external threats, enterprise risk management (ERM) emphasizes the importance of positive risk management. 

Positive risks are opportunities that can add business value or, conversely, harm an organization if not seized. In fact, the goal of any risk management program is not to eliminate all risk, but to preserve and increase the value of the organization by making informed risk decisions. 

Why is risk management important?

Risk management has probably never been more important than it is today. Rapid globalization has made the risks facing modern organizations more complex. New risks are emerging all the time, often related to and caused by the use of current prevailing digital technologies. 

As the world grapples with COVID-19, companies and their boards of directors are rethinking their risk management programs. They re-evaluate their risk exposure and examine risk processes. Companies currently taking a passive approach to risk management, protecting against past risks and changing practices when new risks harm them, consider the competitive advantages of a more proactive approach. 

There is a growing interest in supporting business sustainability, resilience and agility. Organizations are also exploring how artificial intelligence technology and sophisticated governance, risk, and compliance (GRC) platforms can improve risk management. 

Digital Risk Management - Types & Effective Strategies

 Digital risk management is a subset of business management that uses processes to improve the assessment and monitoring of digital risks. This includes all types of risks that affect the financial performance, operations, or reputation of the organization, such as cyber security risks, operational risks and third party risks.

Types of Digital Security Risks

Understanding the different types of digital security risks is critical to protecting against data risks. Here are six of the most common digital security risks to businesses.

• Cybersecurity risk

• Workforce risk

• Compliance risk

• Third-party risk

• Artificial intelligence risk

• Data privacy risk

Effective Digital Risk Management Strategies

• First, it identifies critical assets such as IT systems including databases, websites and payment processing systems and determines vulnerabilities.

• Second, understand the enterprise threats. Understanding how threats behave can help organizations increase the cybersecurity of their systems.

• Third, check the exposed activities. Companies should identify sources of unwanted online presence, including social media, file-sharing sites, and Git repositories.

• Fourth, develop mitigation strategies to protect against digital risks.

Risk professionals also need to remain vigilant to changes within their organization, particularly where new digital technologies have been adopted. You can get yourself qualified in Digital Risk Management by IRM and Warwick.

The IRM India | Enterprise Risk Management

Enterprise risk management is the most common way of arranging, sorting out, coordinating and controlling the exercises of an association to limit the harmful impacts of chance on its capital and profit. Also, it implies implanting risk in the board wherever in your endeavour.

Undertaking risk, the board principles help you recognize and evaluate the dangers and the fantastic open doors in accomplishing your targets.

IRM's educational program engages you with the hypothesis and practice of significant business risk; the executive by the COSO system, ISO 31000 guidelines, IRM's Expert Norm and industry best applications with a blend of contextual investigations, applied activities and current undertakings. Regardless of whether you know it, everyone in an association, from the subordinate to the CEO, engages in the risk management process daily. The organization would buy protection in case of an error or generally very miserable and disappointed clients.