Podcast: Risk Management, Business Intelligence Help Execs Walk the Tightrope

March 31, 2009

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Risk Management measures and provides data in terms of exposure or opportunity for business performance.

Business Intelligence and risk management are linked on two levels. First, when used in conjunction they provide executive level transparency into risks within the organization, and secondly, they can provide a risk-adjusted performance review. For example, when an organization is putting together a strategic plan (i.e. a product launch or new corporate direction) it is critical that the organization has a clear understanding of the risks it may run into, and consequently provide a risk-adjusted performance review. This is where BI is crucial, as it provides data, analysis and reporting—the high level of information needed—to make insightful and accurate business decisions. Through the use of Risk Management and BI practices, overall business performance is improved.

Executive transparency and risk adjusted performance review are tightly linked. However, executive transparency tends to be more of a proactive, operational daily approach at the executive level. This involves understanding how your business is operating, what are the risks, and how you are performing with respect to mitigating these risks. Risk-adjusted performance reviews occur on more of a project basis, where corporate direction is analyzed to deeply understand the possibility of risk, and consequently adjust plans and forecasts accordingly.

How Risk Management and BI Work Together
Risk management cannot effectively function without BI. The BI infrastructure within an organization is needed to collect and analyze data on a highly detailed level which is then input into risk-related decisions. BI also is needed to allow executive level decision-makers the ability to look across all categories of risk (in different business units, categories, geographies etc.), providing a more global view into business performance, and where certain risk-related issues need to be addressed.

Risk Management & BI in Today’s Economy
The demand for risk management and BI have increased in the current economy, as there is more emphasis on an executive and shareholder level to provide transparency into both business performance and risk. It is important to note that risk management industry saw an increase in business prior to this economic crisis, as new risk and compliance initiatives (i.e. Sarbanes-Oxley) were implemented. Some organizations have implemented greater, more holistic risk management systems as a response to new mandates, while other are being proactive, as they foresee global governments implementing further requirements.

Strengthening BI

Here are some tips on leveraging risk management practices to provide stronger and more introspective BI analysis:

Identify and eliminate risk factors and exposure points within the organization to create a strong foundation/base.
Examine opportunities related to taking strategic risks within the business (new products, launches into new geographies/industries, M&A, etc.).
Asses the potential risk exposures tied to moving forward with strategic company direction and initiatives.
Apply this risk management analysis to your overall business intelligence framework to provide executive management/management board with a clear view of not just the company’s risk exposure (and where risks have been eliminated altogether) but where there is an opportunity to take strategic risks with the added layer of business intelligence needed to make smarter business decisions.

About John Kelly: Kelly is the Director of Product Marketing at OpenPages. John is responsible for OpenPages worldwide marketing programs and direction. He brings more than 15 years of experience in enterprise management software, having held marketing management roles at Virtual Iron, HP, AppIQ, Sun and HighGround Systems. He also served as vice chair of the SNIA Storage Management Forum for 3 years where he drove vendor and end-user adoption of storage standards.

Kelly holds a Bachelors of Science degree in Marketing and Finance from Babson College and an MBA from Northeastern University.

The image of the tightrope walker on the home page is courtesy of Wiros.

Posted by Carl · Filed Under Business Intelligence