In mid-2016, Redhand advisers undertook a survey of risk management professionals and, this week, published their findings in a white paper, “Aligning Technology with Risk Management Priorities”. Find a copy of the white paper here.
As with many other surveys or research papers, this one raises as many questions as it answers, mostly because of the limitations of online surveys and the inability to ask responders for clarification of their responses. One discovery I find particularly interesting is that a vast majority of respondents (75%) identify “spreadsheets” as their risk management technology tool-of-choice. With the advent of VisiCalc, Lotus 1-2-3 and other early spreadsheet applications in the 1980’s and early 1990’s, risk management moved forward in the area of data accumulation and reporting but it appears that risk managers have not. This survey shows that their tool of choice is over 30 years old and, by any measure of technology adoption, that is ancient.
Another surprising finding from the white paper is the measurement of Total Cost of Risk (TCOR), or Total Cost of Insured Risk (TCOiR), which only about half the surveyed risk management professionals are tracking. Over half of the respondents identified “Not Enough Resources” as the reason that they do not track this important metric.
These two findings alone cry for more in-depth questioning of risk managers on their application of technology and their statistical measurement of their own contribution to financial control in their organizations. When looking at the reasons that risk managers have not adopted more advanced RMIS tools and why they do not capture TCOiR, the answer is the same: “not enough resources.” Perhaps the next survey should explore why risk management departments are resource-depleted. Could it be that they are relying on outdate tools to get their work done and that they are not EARNING additional resources because they have hamstrung their own productivity, and thus their own organizational relevance?
Read Redhand Advisors’ white paper and see if you don’t start to ask the same kinds of questions. I think it is fascinating that this paper raises more questions than it answers, in terms of the alignment of technology with risk management priorities. Among those questions might be:
- What priorities are you not accomplishing that need to be achieved?
- How does lack of technology prevent your achieving your priorities?
- What specific resources do you lack that prevent uptake of modern technology solutions?
- What are the reasons that needed resources are not available to risk managers?
Often resources are a function of budget and budget is often a function of contribution. Is the problem that risk management departments are not contributing to the achievement of organizational priorities and are not aligned with achieving the results that their organizations really need?
Which came first, the chicken or the egg?