Maintaining a profitable and viable global organization requires a full-time commitment to risk identification and mitigation. Threats to operational continuity, brand reputation, and employee safety lurk everywhere; all items of value (regardless of classification) in a business enterprise’s portfolio of assets are exposed to risk all the time. Proactively managing risk has become a pillar of business intelligence in the 21st century. Every day executives scramble to get better visibility into multiple categories of corporate risk. After all, effective risk management is critical to sustaining not only competitive advantage, it is essential for the survival of the enterprise. Risk management should be driven by business intelligence (and vice versa to a degree) or the transparency of risk will remain opaque at best.
Executive dashboards that have a strong risk management component have become imperative in conveying critical asset exposure information to executives of all stripes. Obviously, without a wealth of quality and relevant data to feed these dashboards, an organization’s risk mitigation strategy and its tactical implementation will be poorly controlled and ineffective. To this point, organizations are starting to focus on data that exists outside of their corporate systems and locus of control—to augment their internal corporate data with data harvested from the internet in order to better gauge risk. The World Wide Web—where data is now the biggest commodity in the world—is the next frontier for risk management-centric business intelligence.
RiverGlass software of West Chicago Illinois has recently completed a risk management study. Their research exposes some important (but not little talked about) realities of today’s marketplace: The most important concept being that information on the internet (usually information freely available to the public) can be used to help companies better understand and stay on top of threats and risks to their company, both direct and indirect. The report provides summaries and classifications of threats to select industries , including financial services, retail, consumer goods, pharmaceuticals, travel, transportation and energy.
A core competency of RiverGlass is the delivery of customized solutions that help companies intelligently locate, collect, and summarize internet content of interest, based on business context and domain-oriented searching: Their software-based solutions let companies effectively utilize public information to drive business value. For this survey, Riverglass harnessed the ontology engine of their software to comb the internet for any information that could prove to be potentially damaging to a company’s brand reputation, safety, or financial veracity. While the survey provided a sampling from only a handful of industries, the main themes and categories of risk produced in their findings will apply to all international businesses. Specific company names or individual names have of course been omitted from the survey results to respect security and privacy.
Risks by Industry
Riverglass sampled the top 10 companies in various market segments (with the results being generically published, although company specific information can be released with proper permission.) Keep in mind that a broad spectrum of risks were defined for this survey, from vanilla compliance threats to darker more subversive ones posed by various hostile individuals or groups. For financial companies, retail and consumer goods companies, and travel and transportation companies, all sampled organizations received multiple mentions; for pharmaceutical and energy companies, nine of the ten sampled companies in each industry received mention. Moreover, Riverglass uncovered a startling number of specific risks or threats for each industry sampled:
- Top 10 financial institutions:
- Top 10 retail and consumer goods organizations:
- Top 10 pharmaceutical companies:
- Top 10 travel and transportation companies:
- Top 10 energy companies:
- 521 specific risks or threats
- 565 specific risks or threats
- 403 specific risks or threats
- 622 specific risks or threats
- 256 specific risks or threats
Risks by Category
Riverglass identified and isolated 14 top types of risk to organizations across all industry sets. Again, the findings were intriguing:
- There were over 7,200 appearances/instances of the different pre-defined risk types.
- Pharmaceuticals and energy companies accounted for more than 60 percent of all risks exposed.
While regulatory issues were 18% of the total instances of threats, other dark-horse threats such as collusion and evil practices/ethics comprised 15.2 and 14.1% of the total respectively. A more specific breakdown follows:
More specifically, for the financial services industry, regulatory and compliance issues made up 87.5 percent of all threats—nothing surprising here. However for the energy industry, a picture was painted of a less mature and regulated industry: Collusion (including price manipulation and kickbacks) and unethical behavior accounted for more than 72 percent of all mentions. As would be expected, for travel and transportation, the safety of passengers and guests had the highest mention; along with cost of energy, this accounted for more than half of the cited threats. For pharmaceutical conglomerates, drug affordability loomed as the biggest risk, while risk factors for retail and consumer companies were spread evenly across five categories—with the top three considerations being those of regulatory, compliance, and mergers/acquisitions activity.
I have been writing for years on the enterprise-wide symbiotic relationship of business intelligence, risk management, business continuity, and corporate governance to one another. Surveys, such as the one executed by Riverglass, help the business community better envision these indispensable relationships as well as educate senior leaders about the “value constellations” that are formed from their coalescence.
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