Complexity and risk define our business environment, yet executives must often look in the rearview mirror with reactionary hindsight to sudden geo-political risks, tragic natural events, market disturbances and global economic swings. Even daily operational disruptions and interruptions are typically handled in a reactive – instead of a proactive, predictive – manner, with resultant financial consequences.
However, those companies with leading risk management practices are looking forward, applying “predictive intelligence” to proactively mitigate and manage complexity-fraught risks, while bringing significant value to their bottom line and their brand. These forward-thinking organizations see change as an opportunity, and they act on possibilities, not just react to problems. The question is how?
Many organizations are increasing their focus on refining those sales and operations planning processes that combine sales and marketing, finance, operations and executive vision to develop enterprise-wide consensus plans. Companies are also re-evaluating their distribution channel strategies and, in many cases, reconfiguring their global networks of assets and relationships. Enterprises concerned with brand value and growth strategies are responding with new product/service innovations, many of which are focused on growth markets. Those forward thinkers that are establishing best practices in risk management are applying insights from customer data and risk indicators across products and geographies to integrate operational and financial performance. They are using analytics at every opportunity to gather intelligence to fight risk exposures.
Rethinking risk management and strategic planning to deal more effectively with the new era of heightened global risk needs to become a top priority. By using advanced methodological and analytical frameworks – early warning systems, scenario planning and predictive intelligence – companies can learn to avoid, address or quickly recover from major risk events.
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Supply Chain Management Lead, IBM Institute for Business Value
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