How to Manage Risk Effectively in this Digital Era?

If your organization is becoming dependent on technology, and there’s a high chance of it happening today, this makes it vulnerable. Yes, technology has changed the ways we work and there’s hardly an organization that doesn’t use it at least on some minimal level. And while you should enjoy the many perks it offers, there’s one big responsibility that comes with this – digital risk management.

If your company relies on technology, it is at risk. On a global level, 30,000 websites are being hacked every day. This equals 64% of organizations worldwide that have experienced at least one form of cyber attack. The numbers are big and don’t seem to diminish. During the third quarter of 2022, internet users reported an increase of 167% in data breaches compared to the previous quarter.

Risk management is a vital part of business management. When organizations manage risks, they focus on the threats to their systems and the information being processed. In this article, we’ll delve into risk management in detail and more importantly, we’ll give you guidelines on how to manage risk effectively in this digital era.

Understanding Risk Management: Why Do Businesses Manage Risk?

Risk management is a process where a company, an individual, or a third party identifies, handles, and controls risks within an organization. When the risk is identified, a plan is set in motion to eliminate or minimize it. Depending on your organization, risks can impact different things such as:

• The company
• Its employees
• Its consumers

If your organization is vulnerable to risks that affect the consumers, this can lead to legal consequences because you aren’t compliant with privacy acts.

The consequences of breaching privacy laws are:

1. Damage to the company’s reputation: Data breaches are bad publicity and can make consumers perceive your organization as less trustworthy.
2. Loss of sales: A company that’s susceptible to data breaches is not a company people want to buy from.
3. Expensive recovery: Recovering from a data breach can cost a fortune. In many cases, this results in legal consequences, which cost thousands, and you might have to reimburse some customers. This doesn’t even begin to cover the money you need to spend to build positive publicity and recover your image.
4. High penalties: If you break the privacy laws and your consumers are harmed because you didn’t take the required measures to protect their data, you can suffer legal consequences, too. The penalties these days are very high.

Risk Management Tips In 2023

If you want to maintain the trust of your consumers, protect your data and save your organization from big expenses, you should invest time and effort into risk management. Now without any further ado, let’s take a look at the best practices to manage risks in this digital era.

Invest In Risk Management Software

Structured risk management is no longer a recommendation – it’s a necessity for an organization that uses technology. Cyber attacks happen when we least expect them, and if you want to minimize losses and keep your organization afloat, you need the best weapon against this.

Risk can include everything from fraudsters and scammers targeting your company to criminals targeting your consumers. This makes it impossible to cover all bases and figure out where the next cyber attack will come from. It is why every organization today needs risk management software.

Risk management software uses advanced technology such as AI to get an instant, clear view of risks. It allows organizations to balance risks and choose the most appropriate methods to mitigate them. SEON, a top-ranked software solution among businesses addresses fraud and scam-adjacent risk. It has the unique ability to create real-time profiles of customers using over 50 different sources of intel and hundreds of data points.

What does this mean for your organization?

Risk management software can do something that no team can do – track everything across different platforms. The SEON search engine utilizes AI to crawl through risk events for the company and instantly generate rule suggestions.

Know Where To Apply The 4 Risk Management Strategies

A successful risk management strategy is not always about eliminating the risk altogether. It’s also about keeping track of risks, controlling them, and getting ahead of them.

Thinking that you can find and eliminate every risk that comes your way is wrong. Some risks cannot be eliminated, so they need to be avoided, controlled, or reduced instead. This is why it’s important to know where to implement each of the 4 risk management strategies:

1. Risk Avoidance – In an ideal world, you would be able to avoid all risks before they hurt your business. Some risks such as external risks are unavoidable in most cases, but you can create a management strategy that minimizes, if not eliminates the frequency of internal risks. Properly training your team can help you avoid many unintentional mistakes that put client data at risk, for example.
2. Risk Reduction – If you can’t kill it altogether, mitigate it! Also known as risk mitigation, this refers to finding ways to reduce the impact of the risk you detected. Certain risks are unavoidable, but it is your job to understand how they can affect your business and have a ready plan in case that happens.
3. Risk Acceptance – Also known as risk retention, this happens when you determine that a certain level of risk is acceptable and won’t do harm to your business. For example, when there’s a certain risk but the profits of the investment are much higher than it, the company can decide to accept the risk.
4. Risk Transference/Sharing – The fourth option is to transfer the risk – or share it with other entities. For example, your insurance company can be the one you transfer the risk to by paying a premium for any liabilities or damages. Or, you can share the risks between stakeholders and investors and if something happens, the losses will be shared, too.

Understand The Data You Hold

Many organizations acquire or hold data from consumers for business purposes. When you collect it, you need to be well aware of what you have. The only way to remain compliant with privacy laws, as well as ensure the protection of consumer data, is to know what type of data you hold – and where.

At this point, it’s important to classify the data you have properly so that you know what to keep confidential. Make sure everyone who handles the data knows if it’s confidential and that confidential data can only be accessed by people who are allowed to use it.

Create A Risk Register

As you detect and handle risks, you’ll find that many of these are repetitive. Creating a risk register is a good idea. It will help everyone get familiar with the common risks of the company, and can also include guidelines on how to report and deal with the risks they find.

The best tool you have for detecting risks, especially internal risks and risks related to consumers, is your team. Communication is vital in the workplace, and this is one of the reasons why. Work with your team to create a list of risks that each project might face. This will provide you – and them with important information and give you time to prepare to tackle risks when they arise.

Train Your Team

Employees are one of the biggest threats to your business’s security. The cause of security breaches often lies in human error. For the most part, you can prevent this from happening. If your team is aware of what constitutes a data breach and what they should pay attention to, this can help them avoid such mistakes.

Communicate the potential risks of each project to your team and the shareholders. Transparent communication between all parties involved in a project is vital and can help you avoid many risks that come your way.

Review Policies

Regular audits of your data policies will help ensure that you are protecting consumers’ data to the best of your abilities. It is not just your business’ data that you need to protect here – it is also the confidential information of your consumers.

In addition to tracking risks and investing in appropriate tools to mitigate them, regularly review your policies and audit your supply chains. This will help you avoid many troubles along the way.

Conclusion

If you’ve skipped a step, amend this as soon as possible. Strategic risk management can save your company’s face, its finances, as well as its data. Risks are all around today, but with the right tools in your arsenal, as well as a team dedicated to detecting and avoiding these, you can make your company safer.