A Deloitte study found that companies regularly spent about $1 million a year on risk management. The largest 11% of companies spent as much as $10 million.
Suffice to say, organizations want to know about risks their businesses face. It never hurts to be prepared and investing in enterprise risk management makes sure companies are never put in compromising positions.
But what is enterprise risk management? Why do you need enterprise risk management software for your company?
In this guide, we’ll be outlining just what ERM is and what it can do for your organization.
What is Enterprise Risk Management?
So what is ERM?
ERM, or enterprise risk management, is a business strategy that looks to identify, analyze, and prepare for any dangers and hazards that could interfere with a company’s objectives.
It’s about understanding what these potential risks are and knowing how to manage those risks. It’s also about making these plans available for stakeholders, shareholders, and potential investors.
Traditionally, companies look at financial, operational, and regulatory risks when it comes to ERM. What do you do if the interest rate rises, or if your product doesn’t get government approval? What happens if your factory burns down?
You typically calculate the risk by multiplying the cost of an event with the probability of that event actually happening.
Cybersecurity is increasingly becoming an ERM threat. Companies are constantly looking for reliable enterprise risk software to ensure they and their clients are in the know.
Benefits of Enterprise Rise Management
ERM looks to efficiently manage risk across multiple departments through a robust framework. However, there are other benefits to ERM that are worth mentioning.
Let’s take a look at a few examples.
Better Risk Reporting
A powerful ERM framework automates templates for reporting issues. This streamlines the process across departments and makes for improved reporting processes.
Modern ERM systems are extremely scalable. Businesses can keep adding functions based on their needs and specifications.
Better Data Quality
Gone are the days of manual record keeping. Contemporary ERM systems optimize the data collection process through automation. This improves the overall quality of your data.
Lower Operation Costs
ERM can point you towards things like delays, which allows your company to be more efficient. Resource management becomes much more optimized, meaning lower operating costs.
Insurers often provide cheaper premiums for companies with dedicated ERMs in place. The more robust your ERM, the more likely your insurers will slash the cost of your premiums.
Better Access to Capital
Companies with robust ERMs are inherently in a better position to pay back any financial obligations. This means organizations can more easily raise money on the market seeing as they can be trusted with investors’ capital.
Leverage Enterprise Risk Management Software Today
Enterprise risk management programs boost your investors’ confidence in your services while allowing your company to be more prepared for potential dangers. Use this article to know the benefits of ERMs before incorporating them into your company’s framework.
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