With finance leaders concerned that they lack the data and information to better manage risk, there are a number of priorities for organizations that want to improve their risk resilience:
Capitalize on today’s opportunities. For many companies, valuable data is trapped in legacy systems and organizational silos, making it difficult for finance leaders to identify risks and gain the insights needed to manage a complex risk landscape. Robynne Sisco, co-president and chief financial officer at Workday, explains that while data has always been important, “the technology hasn’t always been there to give us the access and analytics needed to make the most of it.”
Today, with increasing computing power brought on by the cloud and new analytical tools, organizations can extract valuable insights from their ever-increasing volumes of data, including:
- Risk analytics tools that draw upon both internal and external data sources can provide a unique opportunity to understand key risks, from real-time portfolio monitoring to using machine learning algorithms to identify high-risk customers.
- Organizations can utilize unstructured data as well as structured data to drive insights from new sources of information, such as social media.
- Predictive analytics can be used to evaluate patterns within different types of data and thereby identify risks. This might include assessing which customers are more likely to pay their invoices on time or identifying fraud indicators.
But, there is still a significant untapped opportunity here. Our survey found that only 31 percent of finance leaders are making extensive use of advanced data analytics to support risk management. As we have seen, many feel that their current data and systems undermine their efforts. There are also a number of other priorities they must tackle to seize this opportunity, such as finding the risk analytics skills they need and overcoming any organizational barriers or resistance.
Get timely data into the right people’s hands. Just as important is the ability to access real-time data and deliver it to the right people. Advances in technology are making this possible, as Sisco explains: “Putting finance in the cloud provides global access to real-time data, enabling both speed of processing and reaction, so finance departments can get relevant and timely data into the hands of those who need it to make business decisions.”
Rick Rodick, chief financial officer at TELUS International, is focusing closely on making better use of data within the finance function. Rodick hopes that this data will play a role in helping the company achieve more effective risk management. “My biggest concern is what we don’t know,” he comments. “The more data we have and the more informed we are, the better.”
Of course, on top of getting the data into people’s hands, you also need the talent and skills to understand its implications. As Rodick says: “Not knowing is one thing—but even when you get the data, if you’re not understanding it properly, then you’re making some wrong decisions.”