Investment In Risk Management Software

A lot of smaller banks, credit unions and financial services organizations are still wondering whether this is the right time to invest in risk technology. However, the question that small banks need to ask themselves is not whether they can afford to implement risk technology, but whether they can afford to not have access to risk technology in the current era. Every action that an organization takes has a cost, but every action that an organization does not take also has a cost in the form of opportunity cost.

The challenge that a lot of financial organizations face is that, while understanding that risk management technology will improve existing risk management practices, they look at the cost of the technology and wonder whether the cost is worth it for performance improvements alone. The reality is that while yes, the speed and accuracy of risk management practices increases with risk technology, that is just a fraction of the benefits and value which risk technology brings.

Here are some of the features and tools which banks simply cannot afford to miss:

Monitoring

Risk monitoring can be done manually but there is always a chance that human error will result in a major risk not being detected in time. Making a person responsible for monitoring risks is the usual practice but banks also need to look at the tools being provided to the risk management to monitor technology. When risk is being managed manually there is no way for a risk manager to investigate actual risks – they must make decisions based on risk reports submitted to them by different departments.

Risk technology allows risk managers to directly monitor risks across the enterprise. Instead of waiting eons for risk reports, they can look at risk data in real-time. This means that while some organizations discover emerging risks a month or even a quarter later when the risk report is completed, others are using technology to detect risks in real-time and act proactively. This can be a huge competitive advantage for CROs.

Risk monitoring was always an important feature to have but the pandemic has exponentially increased its significance. As the pandemic evolves, subsides, and increases in different areas at different paces, risk executives now need a faster way to monitor and mitigate risks automatically.

One of the most underrated abilities of risk technology is that it completely automates most of the menial work that is currently being handed by risk experts in financial organizations.

Risk Automation

One of the most underrated abilities of risk technology is that it completely automates most of the menial work that is currently being handed by risk experts in financial organizations. Under an ideal world, all the data and structure which the risk experts need to work will be provided to them and they will simply need to apply their expertise and experience to help improve the way an organization manages risks. The real world is very different from this ideal world – the highly qualified and experienced risk experts spend most of their time managing spreadsheets and going through email conversations so they can deliver the results that are needed.

Risk automation does not replace the expertise or experience of risk personnel – but it does enable them to focus on the big picture. The data and documentation that is necessary for risk analysis is standardized through risk technology and can even be automatically analyzed. This means that the reports and insights which risk managers used to work on for hours are now instantly available. With these reports and insights being generated automatically, the risk experts can instead directly focus on the risk framework of the organization and recommend structural improvements and corrections required throughout the organization.

Risk Insights

Banking and Financial Services is an industry where knowledge is literally power. Knowing how the market will move before the competition means that banks can succeed and grow faster. That is why the risk insights that risk technology enables are so critical. Modern risk management systems automatically parse internal risk data and combine it with external market data to deliver insights, trends, and predictive analytics. This means that risk executives not only have access to better real-time data and metrics, but also to better and more accurate predictions related to markets and other important metrics.

The Value of Risk Technology

These are just some of the benefits which risk technology can provide. Financial organizations need to ask whether they can afford to keep risk management manual, thus tying up expert employees in menial tasks. They also need to ask whether they can afford to manually monitor risks, when risk technology can monitor risks 24/7 with much better accuracy. Lastly, risk officers need to ask whether they can afford to compete with other banks if they have outdated information, but other banks have risk insights due to risk technology. The answer to all these questions is clear in the current turbulent times – missing out on risk technology has a much higher cost that risk technology itself.

Wondering how your organization will perform if risk technology was implemented? Get in touch with our risk experts for a demonstration.

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