Risk management is an important element of any business — after all, there are inherent risks in any business. But as an organization grows and becomes more complex, traditional risk management systems fail to offer the company adequate protection. This is when it’s time to adopt integrated risk management.
Integrated risk management (IRM) offers business owners a holistic look at the risks present within their industry and their organization. This can yield a variety of insights and benefits for your business — which is what we’re here to discuss today.
What is Integrated Risk Management?
Firstly, let’s define IRM: integrated risk management is a set of business practices or processes that unify a company’s risks around a single viewpoint.
Where older risk management practices focused on a single element of a business’s risk (for example, legal liability or data security), IRM offers a more well-rounded picture. This allows business owners to take more informed risks, as they can see how a decision affects every aspect of their company rather than a single department.
What Industries Can Benefit From Integrated Risk Management?
Some industries could benefit from IRM more than others. These include financial institutions, healthcare, and the tech sector, to name a few.
But with that said, it’s important to note that every industry can benefit from using IRM. This risk management system offers businesses more information about their potential risks than any other, which can help them avoid non-compliance and other dangerous decisions that could hurt their business in the long run.
Primary Benefits of Integrated Risk Management
We’ve already mentioned that IRM can benefit your business by offering more comprehensive insights regarding risk. But how exactly does this risk management practice do that? Here are just a few of the benefits that come with using integrated risk management in your business.
Provides Accurate Information
Integrated risk management gives you a more thorough look at the risks your company may face. Rather than focusing on each type of risk individually, IRM takes a top-down approach, looking at all possible risks and how they connect to one another.
This method gives your organization a more accurate picture of your risk potential. With IRM, you can see how any decision you make impacts every element of your business, rather than just one branch.
Agility
Risk is a natural part of running any business. If you want to expand, you face risks. If you want to adopt new products or take on new clients, you face risks.
But when you’re using IRM in your business, your risk management will be more agile — in other words, you’ll be better equipped to handle these risks. You can more easily make appropriate changes to various parts of your business, protecting your organization while making bolder moves to help the company grow.
Cost Savings
Risk management tends to be costly. According to the Risk & Insurance Management Society Inc., the total cost of risk averages $9.95 per $1,000 of revenue! While this cost is an important and necessary aspect of doing business, IRM allows you to allocate your money more effectively.
If you can examine all your risks through one unified process, you can see which risks are the highest priority for your organization. This allows you to make better financial decisions and ultimately save money in the long run.
Create Risk Aware Cultures
Another way that IRM benefits your business is by giving everyone in your organization a better understanding of the company’s risks. When all your employees understand the risks that exist at all levels of the company, they are more likely to make smart, calculated decisions that yield the greatest benefit.
More Automation
In the same way that IRM allows you to more effectively allocate your risk budget, this process also tells you where you can automate or streamline your risk management. This can help improve operational efficiency and minimize the cost and time spent on risk assessments (which makes this yet another way that IRM can help your business save on overhead!).
Reduce Surprises
Finally, IRM helps prevent unintended consequences to various business decisions. If your risk management process examines all possible risks across your organization at once, you can more easily see how one decision impacts the different spheres of your enterprise. This can help you make a level-headed decision — and the ripple effects of your choices won’t take you by surprise.
Integrated risk management can truly change your organization for the better. To learn more, contact ComplianceLine today.
