When using the term risk in the corporate context, we are referring to anything that threatens organisational profitability. There are obvious physical risks that can impact an organisation’s ability to remain active and profitable but there are many more layers and potential threats that businesses need to safeguard against.
CRB: more than insurance
Initially, it may seem that corporate risk and broking or CRB is simply about assessing and understanding risks and getting some insurance in place. Fluctuating markets, changes in regulations and the transformation of the way we work, however, mean risk management requires more than insurance. Ensuring and maintaining organisational profitability involves having partners and consultants who can evolve and develop a strategy to react to industry needs and global change.
There are risks associated with almost every facet of conducting business:
- Financial executive and professional risk
- Climate risk & sustainability
- Political risk, violence & terrorism
- Cyber risk management
The categories listed include traditional risks that organisations would insure against but as businesses evolve so have the areas of risk. The second half of this list includes relatively new potential threats to organisations that have manifested in modern times.
With software evolving and developing at a rapid pace, businesses are frequently investing in consultancy partnerswho don’t just provide an assessment of the risk, they are there to help develop strategies and solutions that enable organisations to manage their exposure.
The digital age brings cyber threats.
Any organisation in the digital age must develop a cyber security risk management framework led by an individualor team who understands the security landscape. When it comes to cyber risks and security, for example, having the ability to identify and quantify risk is extremely important. In any cyber security breach, it’s the outcome of the potential exposure that impacts operational capability, has financial implications, and of course damages reputation and brand. A risk management plan must be developed through the identification and control of threats to organisations’ digital assets.
The cost of a data breach from a cyber-attack amounts to approximately $4.35 million.
With this cost climbing noticeably since the pandemic, an organisation requires multiple strategies to reduce risk. Ring-fencing areas of exposure, remaining up to date on software developments and cloud models and honing their incident response are critical. Data is a currency that can be used in a positive, powerful way but in the wrong hands, it can be extremely dangerous. With a connected business world, any assessment of risk must encompass business partners and their exposure as well as cloud-based technology. The impact of cyber-attacks is far-reaching and causes long-term damage such as eroding the trust customers place in organisations. Risk reduction and risk management must form part of any organisation’s defence as well as a well-conceived response plan should an attack take place.
How do you choose the right partner for assessing and managing corporate risk when there is so much at play? An first step could be to ascertain which risk exposure is the most costly and likely to wreak the most damage to your business. If your organisation is complex and involves partners, using consultancy to give a top-level view could be an initial assessment and then you can narrow your focus to the areas where you believe you are most exposed.