Apartment applications. Job applications. Credit card and bank applications. We’re sharing our data today like never before and with the advent of AI and other technological advances, we’re sharing at a more rapid rate. Data breaches and unethical behaviors give us pause before we jot down our most precious information but, ultimately, there’s no stemming the tide. So, who watches out for us, the customer and the company? Enter the Risk Management Team.
It All Begins with Perception
In May 2018, the General Data Protection Regulation (GDPR) became law across the European Union. Its goal? To place stringent requirements on how business handles customer data. Make no mistake, however, the need and the desire is not EU-specific. It is a matter of trust and security; something customers today demand, for the most part, before signing their information away to be organized, catalogued, and analyzed. Risk teams ensure your data will be used appropriately and ensure processes for future applications.
How do they do this? Risk teams need a cross-pollination of skillsets to help mitigate risk across industries. Often, risk begins in the financial sector, but it can also incorporate project management, data teams, marketing, sales, and Business Intelligence officials. And, with the advances of technology, they may also utilize Artificial Intelligence and Machine Learning to model historical data for future predictions. They must ask the right questions, ensure the right data is used for the right purpose, and validate their findings in a real-world environment.
Roles of Risk
Though in today’s market, everyone has a part to play, those who are focused on risk and considered part of the Risk Management Team might include the following:
- Chief Financial Officer (CFO) and Board Members or Stakeholders
- Business Analyst and Data Science Officer
- Risk Analyst and Project Manager
- Strategy and Predictive Modeller
Together, these individuals work to challenge models, data, and decisions on behalf of customers while adhering to the company’s bottom line. Though Big Data and advanced analytics have evolved, the need to understand risks which differ in complexity, type, speed, and size remains. A few questions your Risk team might find itself asking, include:
- What is the impact of data and how it’s analyzed? Have we invested enough in human capital and technology, and advanced Data Analytics to focus on any potential risk including but not limited to cyber risk?
- Are our validations timely and appropriate? Who is responsible for decisions made by AI?
- Do we have the right people in place? The right tools? Are we willing and ready to challenge our data-driven and analytics-related risks?
- What’s our risk perspective? Do we have a good plan in place? Who will help us put one together and implement it?
Ultimately, risk management in any sector, is the integration of people, processes and tools to ensure early identification and solution of risk across the enterprise.
Setting the Stage or How to Get Your Risk Management Started
- Get buy-in from senior leadership and stakeholders as well as their commitment and dedicated participation to manage enterprise-wide risk.
- Make Risk Management a priority and enforce it throughout its life-cycle.
- Ensure technical and program management are both represented.Program management and engineering specialties should be communicated to ensure the right information is generated to help mitigate risk.
- Ensure risk team members, particularly those in program management, identify any concerns such as contracting, funding, costs, risks, and anything which might promote potentially dangerous ramifications if left unchecked.
Even before your players are in place, you may want to consider a Risk Management Plan
. Your team can help develop the parameters and implement it, but first you need to know what it is you need to watch. The CFO role in the risk team
involves knowing who to pull together, what to look for, and to execute any cost-saving measures through a well-thought out plan to mitigate risk.
Four Items to Consider When Creating Your Credit Risk Team
As important as technological advances have become to help mitigate risk, a business still needs human capital to analyze AI decisions and offer creative solution. So, the first two items to consider when building your team may seem unusually obvious. But, the second two, may not be so clearly necessary. These included oversight and systems-wide supply chain webs of data which must be carefully tended.
- Human Capital - Get everyone on board to ensure the program’s support; Assemble the appropriate people to assess the firm’s risks; Educate your team; Set your risk level.
- Supply Chain - Globalization has made companies’ supply chains more vulnerable than ever.
- Risk Governance - Conduct a SWOT analysis (Strengths/Weaknesses/Opportunities/Threats) to help engage your company members at every level as subtly work in broader educational efforts.
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