Bolstering business resilience in a world of incessant risk
Today’s business environment is fraught with risk. Whether it be financial, economic, security, compliance, reputational or operational, the business risk landscape is constantly evolving and always changing.
But what we’re learning, as we’re continuing through this era of digital transformation en masse, is that organizations best prepared to manage and minimize risk potential are those that are structured in a way that enables them to recognize objective risks, respond to them, and evolve alongside shifting market dynamics -- quickly and at scale.
In order to fully comprehend the impact unmanaged risk can have on an organization, it’s imperative that organizations understand what business risk means to themselves and their stakeholders.
According to TechTarget’s Ivy Wigmore, 'business risk' can best be defined as: "anything that threatens an organization's ability to generate profits at its target levels; in the long term, risks can threaten an organization's sustainability. "
Risk, like any naturally occurring disaster, may be hard to fully defend against. But with modern technology and advanced data analytics, it can be predicted -- and the overarching impact of the risk itself can in fact be mitigated.
Think of predicting business risk like predicting a tornado. In the same way that tornado skies become dark and ominous just before the storm, there are telltale signs of an impending IT incident. Meteorologists know to look at geography, time of year, presence of thunderstorms, barometric pressure, etc., to see if the conditions are ideal for a tornado. Similarly, in the IT world, a change risk prediction solution can mine the accumulated history of an organization's software changes to deliver an ML-based early warning system to alert release and change management teams if an impending production change is likely to fail and cause business disruption in its wake.
In other words, risk prediction analytics are chief among the tools needed to help IT teams forecast and predict environmental changes ripe for an IT incident to occur. What’s more, with incident prediction models in place, IT teams can better isolate areas of impact and prepare to minimize disruptions proactively. In some cases, they may even be able to avert an incident entirely.
Mitigating and managing business risk.
Risk prediction analytics are only one way that organizations can better understand, and therefore, prepare, to combat inherent business risk. Particularly in a world where digital transformation initiatives remain ongoing, organizations should be properly equipped to monitor and quantify risks early on, by having systems and processes in place to respond quickly to emergent risks.
While understanding all potential business risk (at any given moment in time) may be impossible, machine learning and AI-based modeling are uniquely outfitted to leverage historical data to better determine the primary drivers of risk within an individual organization. In other words, one of the most potent weapons organizations have in combating risk is their own data. It’s just a matter of ensuring that the analytics tools you're investing in are the ones best fit to manage and make sense of your information. As the saying goes, not all data analytics toolkits are created equal.
Organizations should also strive to adopt a culture of adaptability -- so that risk management becomes a natural extension of the businesses’ continuously changing processes, practices, and products. One of the ways that organizations can better build adaptability and flexibility into their cultural environments is through Agile adoption and implementation -- in fact 39 percent of organizations today report they have adopted Agile practices for this reason.
Forbes’ senior contributor Steve Denning explains: "Instead of a corporation being conceived as an efficient steady-state machine aimed at exploiting its existing business model, the Agile organization is a growing, learning, adapting living organism that is in constant flux to exploit new opportunities and add new value for customers… Agile recognizes that the future of a firm depends on inspiring those doing the work to accelerate innovation and add genuine value to customers."
Business risk, particularly in the 21st century, may not be entirely avoidable -- but it is manageable. Investing in the right analytics solutions, cultivating a culture that prioritizes adaptability, and continuously improving threat responsiveness, are just a few of the ways your organizations can not only bolster business resilience -- for when these incidents do inevitably occur -- but also ensure that employee and customer trust in your organizational remains steadfast.
Gaurav Rewari is CTO & General Manager, AI & VSM Platform at Digital.ai