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4 Reasons businesses need Integrated Risk Management (IRM)

Anthony Stevens Aug 01, 2022
The Four Big Risk Management Challenges in 2022

For many businesses, 2022 has been a mixed bag with opportunities galore and yet we are faced with daily challenges owing to an ongoing pandemic, supply chain issues and labour shortages. Both the good and the bad are impacting all CEOs to some degree.    

To complicate matters further, we are facing an unprecedented level of risk and an inevitable change. In January 2022, EY published results from their EY 2022 CEO Outlook Survey.  According to the survey, "Leading CEOs are resetting their risk radar and reframing their investment strategy for growth in a new environment.". This means there's a need for a more risk-informed decision-making process - an integrated risk management (IRM) approach. Through this process, CEOs and their company leaders must consider four integrated risks that are crucial in 2022 as they try to integrate enterprise risk management activities into daily operations.

Let us explore the 4 major reasons why Integrated Risk Management is the way forward. 

Sustainability: ESG Risk and Reporting 

Sustainable development has recently gained a lot of attention in company strategy as the effects of large amounts of money committed to enhanced environmental, social, and governance (ESG) practices have become too massive to ignore. According to a recent poll of institutional investors, 77% increased ESG investments in response to COVID-19, with the number rising to 90% for big investors with more than $200 billion in assets.

By improving the attractiveness of investors, having a strong ESG risk profile will provide significant value to businesses. However, the criteria and rules that are being implemented may put pressure on future investors to assess ESG risk metrics. Countries across the globe as well as organizations that set standards such as the IFRS Foundation are preparing to provide greater transparency in ESG reporting and related disclosures.  

General Business Resiliency 

Business infrastructure is being put to test in ways that were not anticipated prior to the pandemic. Supply chains are failing as global distribution channels buckle under the strain of cyber assaults and talent shortages, which are severely impacting product and service quality and accessibility. 

49% of CEOs in the EY survey stated that they plan to increase focus on enterprise resilience. Unfortunately, board members' perceptions of the current state of their companies' resiliency are very negative. 

6clicks' recent eBook, The Biggest Threat to Future Growth includes thoughts from some of the world's biggest companies on the biggest issues concerning future growth, the biggest risks they consider businesses are facing right now, and the critical protection of assets and data. 

Health and Safety 

Because of the pandemic, health and safety have become a top priority for businesses. While it is a major concern today, attention will shift over time. Once a crisis has passed, humans naturally develop feelings of complacency. However, CEOs must work with enterprise risk management professionals to ensure continued management of the health and safety of key stakeholders such as employees and customers, and also the health and safety of the business itself.

That’s why 61% of CEOs in the EY survey who selected Risk Management as a top area for change see the need for more data-driven risk analytics to quickly identify areas of concern. Integrated risk management technology (IRM) utilizes a unified data core to bring about advanced risk measurement and analysis which will be helpful for business leaders.

IT and Cybersecurity Risk Management & Compliance 

All organizations face the continual struggle of keeping up with new cybersecurity and information technology standards, frameworks and regulations. The need to comprehend and evaluate not just your own, but also your partners’, suppliers’, and vendors' levels of compliance adds to the complexity.

It is no surprise then that in a recent Deloitte global risk management survey, only 61% of respondents considered their institutions to be extremely or very effective at managing cybersecurity risk.  

IRM simplifies and streamlines the complex compliance requirements while providing key risk insights into areas of needed remediation.  

How can Integrated Risk Management benefit? 

There is much to be gained by understanding and incorporating the above four risk drivers into your business planning and strategy. In fact, a recent 6clicks survey found that although the pandemic has emphasized the need to focus more on risk management, only 14% report they have an “enterprise risk management program that's easy and works”. This definitely highlights the dire need to have an Integrated Risk Management program.

At 6clicks, our mission is to reimagine risk and compliance, making it easier for businesses to get the results they need and implement an IRM program quickly and easily. In relation to this, Anthony Stevens, CEO and founder of 6clicks, recently published an eBook GRC 5.0: Explaining the Paradigm Shift in GRC explaining the major paradigm shift underway with governance, risk and compliance (GRC) software, integrating your risk approach, managing your cyber security risks, achieving GRC efficiency, and more.

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