The team and I at Ventana Research through development of new research agendas for 2009 have identified business and technology thematic topics that will be critical to all organizations. These topics will be critical for business and IT to be more educated and savvy on how to leverage them for their organizations. These are our assertions and not just predictions for success in this year and we remain optimistic that business can drive significant change in how they use information and technology to advance their processes and people who operate them along with management who need better tools for being effective in their decisions.

Risk Management
Risk seems to be on everyone’s mind these days – for a good reason. The term “Enterprise Risk Management” covers the diverse sets of risks organizations face that can affect profitability, effectiveness and reputation (to name just three) and referenced further on the wiki - http://en.wikipedia.org/wiki/Enterprise_Risk_Management .

“Risk” usually means different things to different people in a company. People look at risks narrowly and to the extent they communicate information about them, it’s only within their area in terms important to them. However, risks faced by one part of a business can affect others, often with a time lag.

For example, your company may need an export or import license for a large order but then some political event occurs and holds up its processing. This will certainly alter your delivery schedule but, depending on your business, you now are left with inventory that needs to be sold, affect your production scheduling at multiple plants, put a big hole in your company’s cash flow or some combination of all of these. There’s a good chance some or all of the business units that will feel the impact of the glitch won’t find out about it – until it’s too late. Better preparation and communication can mitigate the impact of unfavorable events. Not all of the risks that companies need to manage are catastrophic; indeed, the biggest payoffs may come from handling the frequently occurring moderate risks better because over time they have the greatest impact on a company, especially the finance organization.

Mitigating these cross functional risks requires two important steps. One is focusing on the people and process aspects: establish an ongoing method of identifying and prioritizing cross-functional risks and determining the roles and responsibilities associated with this process. The other, equally important step is to define the information technology requirements to support the analytics, dashboards, alerts and scorecard assessments. These will enable people to collaborate and communicate consistently and efficiently.

Although there may be a temptation to wait for better times to begin any new risk management initiative, the current environment is ideally suited to focus on this issue productively. We advise senior executives to focus on improving how their business handles cross-functional risk, a part of enterprise risk management that typically receives less attention than it should.

How are your improvement to your risk management processes and technology for the entire business?

Let me know your thoughts or come and collaborate with me on Facebook, LinkedIn and Twitter.

Regards,

Mark Smith
CEO & EVP Research