Disruptive risks are defined as those risks that have a significant, severe, and often sudden effect on a company’s revenue, profitability, competitive position, and/or reputation. Globally, Directors and the Companies that they oversee are facing disruptions caused by factors like geopolitical volatility, economic slowdown, emerging technologies, cyber-security threats, and climate change, among other forces. Whether driven by unforeseen circumstances or issues hiding in plain sight, disruptive Risks never wait for Boards and management teams to catch up. It is important to note that while disruptive Risks are one among the main concerns for Directors, their confidence in corporate Risk management is low. As risks continue to evolve, the way Corporate Directors and their Organizations handle them must evolve as well.
When we have a closer look at disruptive Risks—particularly cyber risks or threats—it’s no secret that organizations are being held to significantly higher standards of cyber-security outcomes than ever before. Regulatory bodies of the Industry, Boards, and C-Suite, and executive teams all are driving for better oversight and accountability regarding data breaches and cyber-security. Companies and their leadership are looking for ways to prevent the inevitable backlash from Customers, Business Partners, and Regulators.
The conventional approaches to cyber-security performance metrics are highly limited in scope, focus only on a point-in-time and are subjective in nature instead of being comparative. As a result, Security and Risk leaders are forced to make important decisions about their cyber-security programs based on an incomplete set of data. This lack of visibility, transparency, and context can further result in ineffective spending and misalignment of resources.
For Boards, it has become almost vital to obtain a 360-degree view or picture of the future and how that future may impact the company’s strategy. They also need to ask important questions like, What will the business or industry look like one, three, five, or more years from now? What will be the impact of these disruptive forces on the Business or industry, and what Risks will these forces pose to the Company’s strategy? By gaining a better understanding of the future of the Business—the Risks and Opportunities—Boards are better positioned to provide oversight and guidance on the company’s key governance activities: setting and calibrating strategy, monitoring execution and managing strategic risks.
Clearly, Boards need to spend sufficient time to discuss disruptive Risks, and they need to gather adequate information about these Risks. Existing Enterprise Risk Management (ERM) models and crisis-response planning methods do serve an important role, but they might not be enough and exhaustive to help Boards anticipate and respond to Risks outside the expected. With Automation tools like ConfidentG Governance as a Service® take oversight of disruptive Risks to a whole new level of efficiency and effectiveness. Such applications aid in viewing disruptive Risks across multiple dimensions and various frameworks, thereby making Governance Risk and Compliance a competitive advantage and not just Business Processes which we need to carry you periodically. Automation and Artificial Intelligence can be the key drivers here.
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