But other sectors also use risk management tools to mitigate their risk.
How does risk management software work?
It does this by collecting and collating data across the enterprise IT system, and indicating where the risks lie.
Risk management applications also help businesses to manage their IT risk through things like notifying them of security breaches.
The software might also remind businesses to refresh their security when events occur. In addition, risk management supports business continuity by identifying potential and actual IT breakdowns.
What are the challenges of implementing risk management?
From an IT perspective, companies will need to spend money on linking separate systems to ensure overall risk can be seen at one point. This involves using communications technology that can adequately link the systems together in a way that makes sense of all the risk data.
As well as the technology integration, organisations may well need to be able to put a price on their risk, so the data can be of use.
Also, they may need to overcome the different attitudes to risk in different departments before spending on technology.
Where do the risks come from?
The sorts of risk that risk management applications have traditionally dealt with has centred on financial risks, such as credit risk, interest rate risk, or uncertainty in financial markets.
Who uses risk management software?
Many financial organisations, including retail and investment banks, use risk management and compliance software. The reasons for using risk systems varies from mitigating risks from financial investments to covering security breaches and breaks in business continuity.
But apart from banking and financial services, many other key sectors use risk software. These include IT and telecoms firms; the energy sector; government and public sector bodies, and the insurance sector.
Are financial firms required to use the software?
The international regulation requires that banks ensure they have enough cash reserves to cover the financial cost of problems in the business, including fraud and IT failures.
As a result, the main integrated financial trading systems, such as Misys Summit, Calypso, and Murex, have risk management and compliance at the heart of their platforms.
Resources: Leading risk management software firms
- SaS for Enterprise Risk Management
SaS has a risk management platform that is targeted at a number of industries including insurance, energy and government.
- IBM Enterprise Risk Management
IBM’s enterprise risk management and compliance suite is based on Cognos business intelligence. The software offers management reports, dashboards, scorecards, alerts and notifications.
- Symbiant Risk Suite
Symbiant’s Risk Suite is web-based and allows different parts of a company to collaborate on risk initiatives.
- Methodware ERA
Methodware ERA allows firms to integrate their risk assessments, internal audits, compliance initiatives and corporate governance through one tool. It is able to generate reports and analysis.
Companies such as ExxonMobil, Schlumberger and Royal Dutch Shell use Syntex’s enterprise risk management software. It can be used to improve operational, quality, environmental, health, safety and security risk.
- Strategic Thought
Strategic Thought’s Active Risk Manager (ARM) is an enterprise risk management suite which started off as a project risk management product. It now has operational risk management capability, as well as business continuity, and governance and compliance.
Misys Summit is a well-established integrated financial trading system, used by many of the world’s leading banks. It has risk management at its core.
Murex is another well-established integrated financial trading system, used by many of the world’s leading banks. Murex is also based on a platform that has risk management at its heart.
Calypso is a modular Java-based financial trading system which has financial risk management at a key component. It is used by major banks across the world.
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