Do you really need risk management technology in your business? There are some advanced IT systems on the market that are used for risk management, but they might not be right for you. In this article we’ll look at 4 different types of risk management functionality that you’ll find in software products – either built in to what you already have for enterprise project management or available as standalone tools.
First, let’s look at why risk management needs an underpinning layer of technology.
Benefits of Risk Management Technology
At the most basic level, project managers can carry out project risk management with nothing more complex than a spreadsheet. However, when you try to scale that up to a program, or consolidate risks across the portfolio, things start to get more complicated.
Having the right tools for risk management in your organization can make the difference between not knowing what’s going on and having the visibility you need to take the right decisions.
Technology that supports risk management gives you a number of benefits including these.
- Real-time information: When you have teams reporting risk management activities in real-time, this information can be reported in real-time too. This avoids any lag time between the action being entered into a spreadsheet and the reports reaching the people who can act on the information. As you can imagine, the position with some risks can be quite volatile, so having reliable and up to date information is essential.
- Easier monitoring: Risk reporting is far easier when all you have to do is call up the right view or click a few buttons. Your Project Management Office could spend days consolidating reports from individual project teams – or the right software could do it all for them.
- Surface trends: Technology gives you the option for historical reporting. This is often missing in manual risk management processes. The historical and forward-looking data together gives you more opportunity to spot trends.
- Easier escalation: When a risk needs escalating, software makes it easier to flag the problem to the right people. Tag or flag the risk as required, and it will appear in program or portfolio level reports. This removes the need for project managers to escalate outside of the tool, which may or may not happen in a timely fashion, or with the right level of detail.
Here are 4 types of risk management technology that you can consider using in your business.
1. Risk Dashboards
Dashboards are probably the easiest type of technology to put in place, and many enterprise project management tools come with this feature. You can create risk dashboards manually, but it’s a time-consuming process that results in a report that is out of date from the moment it’s finished.
An efficient risk management tool has dashboard functionality that allows you to create helpful views of the current risk profile of a project, program or a portfolio with a few clicks. It should be something that anyone can create (as long as they have permission in the software to do so). Ideally, the whole business will use the same software tool so that all company risks are created and reported in the same way, with a common dashboard interface. This will mean execs get used to the format and helps with standardizing the way risks are managed.
A risk dashboard is useful for all businesses.
2. Automated Processes
A further type of tech that you can adopt for risk management is automating processes through workflows within a tool.
This means that your process of risk identification, assessment, management, monitor, control and escalation is managed through a single process within a tool. You document a risk in the tool, assign it to the right person to assess and they will automatically get a notification that they have work to do.
Once the analysis is complete and entered into the tool, the next step in the workflow will be for it to be assigned to the risk owner. Then a further workflow step allows the risk to be assigned to someone else should it need to be escalated.
This makes it easy for everyone on the team to see what risks currently “belong” to them, and makes it easy to handoff risk management and all the required information if necessary.
Automated processes are useful for businesses that manage risk across a portfolio.
3. Risk Assessment Tools
You can use software tools to help with risk assessment too. This increases the likelihood that risks are assessed in the same way, against the same model. In turn, this makes it easier to compare risks across program or portfolio level and have confidence that they really are comparable.
Basic risk assessment tools are often included in enterprise project management solutions. Add the impact and probability of the risk into the tool and it will generate a RAG (red/amber/green) status for the risk. This is a simple assessment tool that you can do manually, but managing it in the tool increases standardization.
Moving on from this most basic level of assessment, your tool can provide qualitative rankings for risks with a few more parameters. For example, you may have to rank impact on different areas of the business, or overall proximity or vulnerability. You’ll get out something more granular than ‘high/medium/low’ (which is effectively the RAG status). The output might be on a 1-10 scale, for example.
The most detailed risk management tools take this even further. Risk assessment is done within the tool using ranges for uncertainty. In other words, instead of simply rating on a scale, you can add granularity with an uncertainty ranking for each parameter. This type of calculation is really too complicated to be managing at scale using spreadsheets.
Because there are so many levels of risk assessment tools, you can choose the level of complexity that feels right for your business.
4. Advanced Risk Management Tools
Risk management technology and tools can take your risk management even further. They can do risk modelling, run scenarios and flag problems through early warning indicators in your reporting. When the data is in the tool, advanced risk management tech can take the heavy lifting out of managing your risks. This functionality is sometimes available in your enterprise systems, and available as standalone products too.
These tools are most useful for businesses that already have a mature risk management culture and who are managing significant numbers of risks that need to be overseen and modeled in depth.
The way you manage risk is supported by your tools. You can really go as advanced as you want, or keep it simple. Whatever you consider to be the right level for your business is fine – you can always add deeper levels of data analysis as your risk management culture matures and the data becomes easier to collect.