Posted by Punk POS ● May 12, 2021 11:32:12 AM
Risk Intelligence: Boost Your Company's RQ
Risk intelligence refers to the company's comprehensive ability to anticipate and respond to a wide range of different risks. Risk intelligence in business empowers firms worldwide to combat adversaries and threats. It is a core element that must be developed when building an effective and successful organizational risk management program. A thorough risk intelligence program is not just essential to the ERM program's success, but it is vital to the resilience, survivability, and viability of the entire enterprise.
Risk intelligence consists of six components.
- Risk Awareness
It is the ability to identify a broad range of threats that could harm your business. Risk awareness refers to how aware your business is about multiple risks that are out there.
- Signs of weak risk awareness – Enterprises with inadequate risk awareness always focus on specific types of risks. For instance, enterprises in California are well prepared for wildfires but do not consider other potential risks such as tornadoes or active shooters. Small enterprises are likely to have weak risk awareness
- Signs of strong risk awareness – Companies with strong risk awareness get prepared for all types of risks that can affect business continuity and employee safety. Apparently, it's impossible to develop detailed contingency plans for all potential risks. However, by identifying the primary risk type and developing flexible plans to respond to multiple threats, you can boost risk intelligence and position your enterprise to respond to accidental events.
- Risk Understanding
The ability to show a detailed knowledge of a given risk is known as risk understanding. This component mostly comes from experience. Experienced managers working in business continuity often show high-risk understanding.
- Signs of weak risk understanding – Companies having weak risk understanding are often underprepared. For the most common threats like workplace fires, strong preparation is necessary to understand the unique nature of the risk. Firms that put the slightest efforts to prepare, like installing fire alarms, have a low grade for risk understanding.
- Signs of strong risk understanding – Firms with strong risk understanding have the specific infrastructure and plans in place for all the major threats. These companies understand the value of regular fire drills and tabletop exercises to keep the employees informed and prepared.
- Risk Evaluation
The ability to evaluate the severity of risk once it emerges is known as risk evaluation. For example, an active shooter situation is undoubtedly a high severity risk. Likewise, a thunderstorm is less severe. Firms differentiate themselves in cases where risk severity is not so easy.
- Signs of weak risk evaluation – Firms with weak risk evaluation always struggle to determine how seemingly far-off risks can impact their operations. They are inefficient in performing root cause analysis and can't take preventive or corrective actions when the threat emerges.
- Signs of strong risk evaluation – Companies with strong risk evaluation always think and prepare for two steps ahead to prevent the risks from impacting their business operations and people. A firm with exemplary risk evaluation immediately identifies the severity of the risk and mitigates its impact before anything hazardous happens.
- Risk Projection
Risk projection refers to the ability to predict how a threat is going to develop. This component is used to handle risks and measure risk reduction and risk exposure. Effective risk projection also refers to not being unreasonably optimistic.
- Signs of weak risk projection – Companies with weak risk projection show misunderstanding of the fundamental causes or impractically optimistic outlook for how the risk will emerge.
- Signs of strong risk projection – Enterprises with strong risk projection understand when to count on outside expertise. They always stay up-to-date and plan according to the latest predictions.
- Risk Assessment
The ability to determine the organization-specific impact of a given risk is known as risk assessment. It may seem similar to risk evaluation, but there is a difference. Risk evaluation identifies the severity of the risk. However, the risk assessment needs you to quantify the particular impact of the risk on your company.
- Signs of weak risk assessment – Companies with weak risk assessment sometimes assume the least or most impact of the risk, both of these are problematic. The employees sometimes experience serious problems because the firm fails to notify them of the effects of the threat and sometimes experience notification fatigue as they constantly get alerts for threats that never affect them.
- Signs of strong risk assessment – Enterprises with strong risk assessment always have plans in place to identify the precise impact of every risk. These firms avoid notification fatigue and never let their people slip through the cracks.
- Risk Response
The ability to react effectively at a given risk is known as risk response. This component begins with planning and preparation before the threat emerges.
- Signs of weak risk response – Organizations with inadequate risk response often depend on outdated communication methods when the threat emerges. Their emergency response plan is only a formality for them.
- Signs of strong risk response – Firms with strong risk response always depend on modern technologies with threat monitoring capabilities. They effectively and quickly communicate with their employees over multiple channels to ensure that people get the alert message rapidly.
All six components of risk intelligence are crucial. If your organization is weak in any one of these components, the entire risk intelligence will suffer. Therefore, incorporate complete risk intelligence so that you can effectively manage risk before it potentially causes your business to collapse.