Strategizing and Prioritizing Risk: A CFO’s Journey

At the center of building and navigating an organization’s strategic journey, CFOs are constantly juggling business priorities, opportunities for strategic investment and maintaining a balanced budget. Ensuring the organization achieves its goals and objectives in an effective way is always going to be top of mind. To stay focused in the current challenging business environment, it’s more important than ever, the CFO has clear line of sight into the organization’s risk profile and understands the potential for risk to negatively impact business strategy and derail the company’s success.

CFOs are often presented with what can best be described as a fragmented view of enterprise risk. This can put CFOs in a difficult position given the ever-increasing demands and expectations from Boards and regulators (to name but two interested parties). Further, risk mitigation decision-making can become biased and highly subjective which can, in turn, hinder the successful execution of business strategy.

The broad array of an organization’s risk sources, including cyber, data privacy, regulatory, ESG and operational, coupled with existing manual risk management processes and information silos, makes it difficult for CFOs to build a meaningful and current “across the board” view of the company’s risk profile.

Notwithstanding the efforts of key CFO colleagues, including the CRO (Chief Risk Officer) and CISO (Chief Information Security Officer), the traditional governance-based approach to risk management is in practice a reactive and piecemeal process, generating (at best) a qualitative rather than quantitative view of risk. This limited-value approach exposes the organization to blind spots and potentially misses opportunities for CFOs to increase overall operational effectiveness and efficiency. 

Going forward it doesn’t have to be this way. Without discarding an organization’s current risk effort, a simple three step process can help a CFO pivot to a position where risk management is forward looking, holistic and, importantly, fully integrated into the organization’s business decision-making processes. The three steps are as follows: 

1. Implement a near real time technology-driven approach for collecting, ingesting and aggregating risk data. Using AI/ML, data from multiple sources can be normalized, enabling quantification of risk exposure and calculation of annual loss expectancy. 
2. Use AI/ML to drive risk scenario planning to make more informed investment and risk mitigation decisions. “What if” scenarios provide CFOs with a powerful mechanism for discussing and prioritizing investment decisions. 
3. Generate intuitive, near real-time dashboard analytics for different personas and purposes. Customized, data driven visual analytics for different audiences underpin fact based thought leadership; again improving decision-making abilities and highlighting the impact of different risks on the organization’s goals and objectives. 

OptimEyes Integrated Risk Modeling & Decisioning Platform uses the term ROAR (Risk Orchestration, Automation and Response) to describe how the platform provides a strategic rather than tactical approach to risk management. The advantages of this approach include being able to link the organization’s risks to the impact on its goals and objectives; understand revenue at risk; create a near real-time, quantifiable view of risk; and remove the bias from decision-making, which enables more effective risk mitigation. 

OptimEyes Integrated Risk Modeling & Decisioning Platform supports multiple CFO-focused use cases. Unlike the traditional governance based approach to risk management, CFOs have a one-stop solution for managing strategic priorities in the context of their current risk profile. Example use cases include: 

1. SEC cyber risk governance reporting requirements: The disclosures generated will not simply be “check the box” but based upon data driven cyber risk analytics used across the organization for different purposes and integrated into the organization’s operations. OptimEyes describes this as leveraging the Single Source of Truth. 
2. SOX reporting: A practical example of how the platform can help improve efficiency and effectiveness by shining a light on controls and processes that could benefit from enhancement. By making the certification process more intuitive, the reporting creates additional value to the organization and becomes integrated into the broader risk management program. 
3. Risk Common Control Model: In a highly regulated environment the ability to understand the commonality of regulatory requirements and corresponding controls creates a holistic risk-based view of regulatory risk. Importantly, it provides focus on those enterprise-wide controls needing more urgent remediation. 

CFOs continue to look for more intuitive ways to maintain resilient operations and build a competitive advantage. Implementing predictive AI/ML driven risk modeling techniques not only keeps CFOs on the front foot during these challenges market conditions but provides a fact-based platform for understanding the impact of risk on business goals and objectives - and potential impediments to executing a successful business strategy.