Enterprise risk management transforms the way enterprises manage risks.
- With increased digitalization, the urgency to invest in risk management tools is seen across industry segments.
- This article highlights the top five emerging trends in enterprise risk management that will significantly influence businesses.
In recent times, global economies have grappled with multiple disruptions, including the COVID-19 pandemic, record inflation, supply chain interruptions, and a rise in geopolitical tensions. As a result, enterprises have struggled to stay afloat amidst the crisis. This has brought a major shift in how organizations view the enterprise risk management (ERM) landscape.
Additionally, with increased digitalization, the urgency to invest in risk management tools is seen across industry segments. According to a January 2023 report by The Business Research Company, the global enterprise risk management market stood at $4.78 billion in 2022 and is expected to reach $5.1 billion in 2023. The major players leading the ERM market include IBM Corporation, Capgemini, Infosys Limited, Oracle Corporation, and SAP SE, among others.
As disruptive technologies emerge and new regulations emerge, the ERM trends are set to reshape the risk management field for different industries. Here are the top five enterprise risk management trends to watch out for in 2023.
1. Rising data privacy concerns and regulations
Data privacy has become a major contributor to risk exposure for businesses in the modern world. With more focus on keeping the user data safe and the constantly changing global data regulations, organizations are keen on keeping track of how businesses interact with the user data.
EU’s GDPR policies came into effect in 2018. However, since then, the regulations have been subject to constant change globally. According to the data published by CNBC in December 2022, 35 of the 50 U.S. states are considering data privacy regulations, while California’s CCPA is expected to become much more severe.
Hence, organizations must comprehend relevant data privacy laws and implement best practices to manage risk-mitigating tools to stay compliant. Such steps ensure you have policies and risk control initiatives to protect your user’s data.
2. Focus on cybersecurity insurance
With the substantial increase in cyberattacks, 2023 is expected to witness a shift in the cybersecurity paradigm. Enterprises are already pushing for measures like cybersecurity insurance to control the damages resulting from such attacks. According to the November 2021 data from Cybersecurity Ventures, the cyber insurance market is expected to reach $14.8 billion by 2025 and exceed $34 billion by 2031. Such an approach can help enterprises to spot vulnerabilities and develop controls to identify risk actors before suffering any loss from the event.
3. AI in governance, risk and compliance (GRC)
AI-based automation is increasingly being adopted in GRC approaches. Automation saves time for GRC professionals who intend to optimize compliance with appropriate laws and regulations. It has been observed that real-time analysis of GRC data and automated reporting benefits GRC programs by increasing operational efficiencies and reducing costs and risks involved in manual GRC handling. GRC processes coupled with AI tech ensure that the enterprises meet regulatory requirements while staying compliant with ethical guidelines.
4. Strategic partnerships
Strategic partnership is another key trend observed in the ERM market. With such tie-ups, companies leverage each other’s resources and expand their market reach. For example, in August 2021, Galvanize, a global leader in SaaS GRC software company headquartered in Vancouver, partnered with Turnkey, a leading integrated risk management consultancy. The strategic partnership allows Turnkey’s global SAP customers to use Galvanize’s HighBond – an enterprise governance software platform.
5. Focus on proactive risk management strategies
Proactive risk management implies focusing on preventive tactics that keep track of potential risks before they hit the organizational setup. This is possible through proper planning, effective communication, and rightful decision-making. Secure by design is one such risk management approach where security strategies and tactics are enforced during software development. They act as guiding principles to developers.
As enterprises continue to broaden their functional scope, compliance, data security, and privacy regulations are inevitable to mitigate risks that could potentially cause economic losses and thereby halt business operations. Hence, organizations can secure themselves from potential threats by adopting a proactive approach.