bankingciooutlook

Common Challenges Facing Efficient Risk Assessment

Banking CIO Outlook | Tuesday, March 02, 2021

Today, common challenges to performing risk assessments are similar in nearly all organizations, but the strategies used to identify and prevent these challenges are unique to each organization. A sincere, thoughtful, and authentic assessment of the risks confronting an entire enterprise or a business segment allows for correctly identifying impending threats

Fremont, CA: While each failed business story in the last decade has invariably pointed to the absence of meticulous risk management models, it is also true that efficient risk assessment faces certain challenges. Moreover, these challenges are common across industries, with varying severity depending on business type, enterprise size, and organizational culture. Among these difficulties are the following:

Risk assessment is viewed as an impediment to day-to-day business operations: Although businesses recognize risk assessment as a critical discipline, acceptance is still largely academic. As a result, many companies delegate or postpone risk assessment in favor of routine business tasks and view related practices as having little value. This flawed approach stems from the organizations' inability to develop a solid business case for risk assessment.

Organizations have difficulty with the process itself: Among enterprises ready to practice risk assessment, a bafflingly large number become entangled in the process itself, rarely reaching a fruitful conclusion even though the concepts and principles of risk assessment are not complicated.

Data interpretation to derive actionable insights is more complex than it appears: There is information, and it is being generated at an unprecedented rate and volume. While organizing and processing large data volumes to anticipate risks is challenging, post-assessment data interpretation may be daunting for organizations, including large corporations.

Data from risk assessments do not always accurately reflect the current state of affairs: The above scenario is exacerbated by the fact that the methods used to gather the necessary information are frequently flawed. For example, organizations often employ ineffective tools such as questionnaires and surveys. An unnoticed issue with these traditional methods is that the answers are provided to please the assessors, which hides the proper areas of vulnerability, affecting the very purpose of the process and making it less effective.

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