What You Don’t Know About Risk Might Hurt You
Does anyone besides me remember the movie “Risky Business” from the ‘80s? You know, it’s the one that launched Tom Cruise’s career – he plays a kid who takes some big chances, has an adventure, and then ends up with the girl in the end. Well, CIOs have a opportunity to star in their own version of Risky Business – but their role has to do with selecting and implementing risk management applications that just might save the company…
All About Risk-Management Solutions
The global economic meltdown of 2008-2009 revealed that most companies really have no idea what kind of risks they are taking when they make business decisions. The world has gone global and so just about every decision that a company makes could come back to haunt it. If only there was some way to see into the future.
Sadly, a magical crystal ball that will reveal the effects of a company’s decisions has not yet been invented. However, we’ve already got the next best thing: risk-management systems.
As more and more companies start to investigate how a risk-management system could help them to make better decisions, the opportunity for future CIOs to step up and lead the charge has arrived. Robert Iati over at the TABB Group says that spending on risk-management solutions grew at 11.5% from 2009-2010.
As a future CIO, you may be called on to help sort out just exactly what kind of risk-management solution would work best for your company. Many solutions are designed specifically for financial services firms (this is where this type of application was born after all). However, there are a number of solutions that allow firms to monitor operational risks in their non-financial industry.
How To Use A Risk-Management Solution
The way that a risk-management system works is by collecting information from other systems and then processing it. The CIO is going to play a big role in making sure that the needed data is both accessible and available in a timely manner. Depending on the type of data, the risk-management system may need near real-time updates and this can put a strain on even the best run IT department.
As we in IT are only all too well aware, any risk-management application is only going to be as good as the quality of the data that is being fed to it. This means that there may be additional data scrubbing and / or normalization activities that need to take place before the data is presented to the risk-management solution.
After having gone through the effort of selecting, purchasing, and hooking up a complex risk-management solution the CIO has one more role to play – doubter. We all know how this goes: an application cranks out a pretty looking result and everyone stands around looking at it as though it had just come down the mountain carved into a couple of stone tablets.
The CIO needs to be the one to step back and remind everyone that any risk-management solution is not some sort of magic box no matter how much data you might be feeding into it. Instead, everyone needs to be reminded that the application is telling you what might happen in the future. It will tell you what you should do, but it won’t take the action for you – that’s going to still require human decision making.
What All Of This Means For You
We’re always talking about that IT / Business alignment thing and trying to come up with different ways to make it happen. The global economic crises of 2008-2009 has caused firms to start to seek out risk-management solutions and this opens a door of opportunity for CIOs to help out the business.
There are many different types of risk-management solutions and a CIO can help with the selection process. The system needs company data in order to operate correctly and where that data will come from (and how frequently) is something that the CIO will need to determine.
Opportunities to use IT to help out the entire company like this don’t come along often enough. CIOs need to size this moment and use it to once again show the value of the IT department to the rest of the company.
Question For You: Do you think that a CIO should play a role in selection which risk-management solution a company chooses?
What We’ll Be Talking About Next Time
I’m sure that when you picture yourself becoming a CIO in the future you see yourself sitting at the corporate strategy table with the CIO using your deep understanding of IT to help the company move faster and do more. Umm, one problem with that vision – you’re not going to make it to the big table if you don’t solve the problem of run-away IT costs…