Inefficient Risk Management Practices Cost Billions

AberdeenGroup: Billions lost to inefficient risk management practice
Regulatory mandates and corporate policies are shifting technology buying decisions from IT to business executives. As a result, forward-thinking IT managers that anticipate the needs of business leadership and seek technology solutions and processes can contribute to business improvement and competitive advantage and avoid financial loss and legal liability, according to new research from the AberdeenGroup.

The research, presented in 'The Compliance Gap Benchmark Report: Aligning the Risk Management Priorities of IT and Business Executives,' demonstrates that most organizations are not gaining financial benefits from their risk management programs because they fail to focus on merging compliance with risk management.

"The adoption and measurement of a risk management strategy is not easy because the concept of risk has changed with a shift in priorities," says Mounil Patel, AberdeenGroup research director for Security Solutions and Services. "More often, organizations do not recognize the importance of closing the cultural gap between business executives and information technology executives."

Patel notes that best-in-class companies rank the alignment and standardization of procedures company-wide as their top risk management challenge. The CFO is often seen as having the greatest visibility of the company's internal processes and as such is the ideal candidate to take responsibility for risk management. Best-in-class companies use frameworks and other tools to emphasize risk in operations and tend to stress center-led organizations and centralized risk management with decentralized execution, and utilize these key performance indicators to measure risk management performance. The gravity of risk management is clearly visible in terms of the spending relative to revenue.

Companies miss valuable ways to improve business operations and competitive advantages.

According to the report, successful companies:

Believe the top risk management challenge is aligning and standardizing procedures and systems company-wide
Place the responsibility for risk management with the CFO
Use frameworks and other tools to emphasize risk in operations and tend to stress center-led organizations and centralized risk management with decentralized execution
Utilize key performance indicators to measure risk management performance

The report discusses tools to benchmark enterprises' risk management programs. The report also recommends how to measure risk management performance and the processes and technology to help enterprises achieve compliance with corporate policies and regulatory mandates.

For a copy of the full report go to: http://www.aberdeen.com/summary/report/benchmark/RA_RMG_SQ_3157.asp