Why Do Companies Need Real Time Continuous Risk Management?

In this week’s blog post, we’re sharing insights based on our latest interview with Atul Vashistha, the CEO of Supply Wisdom. Supply Wisdom’s mission is to help enterprises prevent risk disruptions that businesses face today. Their solution delivers continuous third-party and location risk intelligence and risk actions in near real-time across the widest risk aperture to minimise the risks of disruption facing their business, supply chains and third parties. They help with procurement, supply chain and operational risk to ensure leaders prioritise, move faster, do more with less resources, and act proactively and confidently.

Our topic for today is real-time continuous risk management and why it is crucial to ensure companies to continue serving their customers without disruptions.

How Do Companies Do Risk Management Today?

We often see that companies do risk management in a way that focuses on financial risk and cyber risks, especially when they are working with a supplier or a third party. This undoubtedly helps prevent potential bankruptcy, or in case of cyber risks — against ransomware or hacking attacks that may happen at any time. These are important risk management areas for companies to be aware of, as they need to know if anything can disrupt their service to their customers, or even the service of their suppliers.

However, this is not where risk management ends, or the only thing you should be focusing on. In the case of the pandemic for example, we’ve seen how a disruption could start at a very limited area, but before we knew, how it could evolve from a location-based risk towards a global concern. It was not in the form of a financial risk nor was it a cyber risk even though it has brought those risks alongside with it as a result. In particular, lockdowns caused a lot of challenges in these aspects as a lot of -especially small- businesses couldn’t operate in person and needed to adapt to online solutions.

Shift into a Dynamic and Continuous Risk Management

Following the challenges the pandemic has brought in, the companies have started to realise that previously they have been looking only at a limited set of risks. With such realisation, a shift into a more dynamic risk management has started. Now, companies need to look at a full spectrum of risk such as what Atul calls the seven risk domains: financial risk, cyber risk, operational risk, compliance, ESG, 3rd party risk, and location-based risk. If companies focus on all these seven risk domains,they will have an overview of their true risk exposure and can prevent losses while also creating new opportunities for their growth.

As risk is so dynamic, companies have to do assessments before a huge problem arises, and in a continuous manner. This approach should be expanded to their interactions with third-parties as well starting from their onboarding to working with the company. It will allow companies to learn what the actual risk exposure is on their end as well as on the third party and supply chain risk management end. This will provide an early warning system, however it is only achievable if companies move from periodical risk assessments to a real-time continuous model.

Use of Technology and Automation in Risk Management

Real time and continuous risk management can also be further enhanced, thanks to the tremendous improvements in data science automation which can be a source of actionable insights. Furthermore, companies can utilise AI and data science we have today to run information through algorithms that can do an impact assessment. The manual process of today’s risk management can be greatly automated in these forms, allowing risk managers to focus on the aspects that they can add more value with. On that note, automating the entire life cycle is crucial. The use of cloud data science automation to automate the entire life cycle from detection and analysis of risks to taking certain risk-related actions based on what only risk managers might be able to provide the automation with is a great example of using such technology.

Bringing the automation process early to your continuous real time risk management and making sure it follows through in terms of how you manage your third party and supply chain interactions will allow you to break down third party risk management into priority categories, and allow you to become the source of real-time risk intelligence. This adds extra value to your company and for your third parties as they will also be able to make much better decisions regarding their business cycles. Through this, effective risk management becomes a great asset for sourcing new opportunities and bringing stability and resilience for your ongoing business operations.

Closing Words

For now, this sums up the key points of our interview. As the Global Risk Community team, we once again thank Atul Vashistha, for providing his insight on how to transform into continuous and real-time risk management and the benefits of this approach while utilising technology and automation.

More information about this topic is available in our original interview, which is accessible here.

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