Importance of Integrated Risk Management

With COVID-19 starting to get slowly under control, one thing that became brutally obvious very early on during this unprecedented pandemic was that in order to succeed even under those adverse market conditions, more than ever it was crucial for management to be able to rely on up-to-date risk information in order to take agile and quick decisions not only based on past experience or intuition but rather based on reliable, data driven risk insight.

By combining past, present and future oriented (internal & external) data points throughout the organisations three lines of defence, Integrated Risk Management (IRM) acts as the connecting tissue bringing together all relevant elements that allow informed decision making to remain in control of the organizations direction of travel. The more integrated the framework is the more it becomes self-optimizing where outcomes are predicted based on transparent, business value driven insight rather than reactive remediation based on outdated information, fraud or error.

In our new series focused on IRM topics we will delve into how to best derive business value from an integrated risk framework taking into consideration other ongoing or planned business transformations, where to set the priorities when starting a risk transformation to avoid common pitfalls and demonstrate what it takes to successfully set up and deliver the IRM journey in a complex environment. The series will be finished off linking IRM to an organizations digital transformation journey, outlining how advanced analytics, AI and intelligent controls will transform the way risk and compliance is being managed and why it makes sense to connect the dots earlier rather than later.

What does IRM stand for?

IRM or Integrated Risk Management is the holistic approach to manage all risk relevant information in your organization, from:

• Risk & control ownership on the 1st Line of defence
• Compliance management and oversight activities on the 2nd
• Internal audit & assurance planning & execution on the 3rd Line
  

It spans across all risk categories (strategic, financial, operating, security, regulatory compliance) and related compliance management activities (e.g. policy lifecycle management, risk & control self-assessment, control testing, evidence gathering and audit etc.) to create transparency whether the organization operates within its external or internal boundaries.

The benefits

The benefits of an integrated risk management framework are manifold, ranging from:

• Lower cost of compliance
• Significantly reduced fraud and remediation costs
• Lower reputation risks to increased strategic risk insight driving business agility and accountability as well as rapid decision making to name just a few
  

IRM (or Governance Risk And Compliance GRC as it was called previously) is ideally built on a one platform approach in order to have a central source of truth, however nowadays IRM/GRC platforms offer a multitude of integrators and connectors to surrounding systems to get the most out of the existing systems landscape, no matter what your specific technology environment looks like.

Technology solutions in the IRM space are typically built modular and can therefore be expanded at your own pace and scale. They come with strong reporting and analytics capabilities allowing you to tailor dashboard and risk/compliance reports to your specific needs.

Are you interested in finding out how your organisation measures up? Take our maturity self-assessment to determine the maturity level of the Integrated Risk Management capabilities within your organisation.

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How Deloitte can help

The vision

With risk information interconnected through automated workflows and across the organization, connectors built to underlying real-time feeder systems, an increased level of control automation, adequate data quality and the right governance processes ensuring the frameworks integrity you’ll be able to build correlations, identify trends and eventually reach what is considered the holy grail in risk management: predictive and prescriptive risk management.