The Rising Prevalence of Enterprise Risk Management among Businesses

Enterprise Security Magazine | Thursday, July 28, 2022

The opportunity for firms that want to be successful in the B2B market is to create systems that are considerably more conscious of third-party risk and verify what is needed for a particular job or service qualification. Adequate verification may reduce risk and liability and ensure brand integrity, earnings, and expansion.

FREMONT, CA: In 2021, the pandemic handed corporate managers all sorts of unanticipated curve balls. The escalating scenario called into question the precision of CEO forecasts, the assumptions of corporate risk managers, and the extent of company readiness for unforeseen events.

This year ushers in several corporate changes, expansions, and opportunities—these factors have contributed to the current emphasis on evaluating and managing organizational risk, which is anticipated to continue and intensify over the next year. The following are some themes that business risk managers will likely be particularly interested in and focused on in 2022.

Focus on Third-Party Risk: Forrester forecasts that third-party problems will cause sixty percent of security incidents. Supply chain issues will persist well beyond the year-end in 2021. However, management is concerned with more than just material availability and delivery schedules—when signing contracts to offer services, corporations are becoming increasingly concerned with checking if their third-party providers have the insurance and certifications they claim to have. 75 percent of third parties in the average firm fail to meet contractual insurance obligations, according to a study.

However, risk can extend beyond third parties. Fourth-party hazards are the hidden dangers that the third-party partners present. As vendors maintain relationships with additional vendors and partners, they become fourth parties for an organization.

Corporations can protect themselves significantly from third-party, fourth-party, and "Nth-party" risk by ensuring the adequacy of their third-party risk management systems and checklists, questioning third parties about their third-party risk management systems, and implementing robust contingency and business continuity plans in the event of unforeseen incidents.

Acceleration of Digital Risk Management Adoption: Corporations will adopt and utilize the technology of the next generation at their peril. Powered by advancements in AI and ML and easy access to vast amounts of data, intelligent technologies will aid human-led risk management and sometimes even replace it.

Too many organizations still manually manage regulatory change. Regulatory technology, or Regtech, has swiftly become mainstream in the financial sector, and most other industries will soon adopt it. Any organization that does not use technology to manage regulatory compliance and changes is playing with a disadvantage.

The benefits of regulatory technology significantly surpass its costs by a vast proportion. Before five or ten years ago, it was apparent why so few organizations had embraced regulatory technology; the technology was costly and difficult to apply. On the other hand, today's solutions are affordable and can be implemented in a few days with minimal inconveniences.