Why your Risk Management System should be Quantitative

Traditional risk management takes a siloed approach allowing each department or business unit to manage its own risks and measure them in different ways. Some may use probability distributions, most will use risk matrices – often of different dimensions and scales making them incompatible. The result is that executives commonly worry that they have a very poor overview of the risks facing the organisation that they are charged with running, greatly limiting their decision-making abilities. Enterprise risk management standards like COSO and ISO31000 emphasise that a risk management system should:

• Be structured and comprehensive
• Use the best available information
• Seek continual improvement
• Focus on decision-making
• Improve operational effectiveness and efficiency
• Be integrated across different functional roles
• Create value for the organisation
• Improve organizational resilience Each one of these goals can only be achieved if one has a consistent, quantitative evaluation system for risk across the different roles and responsibilities within the organisation. A quantitative risk management system allows one to sum and compare risks:
• Sum risks to get an aggregate view by entity, region, product, etc.
• Compare aggregated risks to see where risk is concentrated
• Compare the risks of different decision options
• Balance risk against reward
• Compare the cost of risk treatments against the added protection they provide
• Track changes in risk exposure and efficiencies Pelican IRM is a fully quantitative integrated risk management system providing all these benefits with built-in modules to minimise the need for any knowledge of probability and mathematics.

The Pelican Advantage

Focus on what matters most

Pelican allows a business to focus on the risks that are truly important, and to assign responsibility of specific risk management activities to individuals.

Collaboration in managing risks

Pelican provides the facilities to ensure that anyone in the company can contribute to risk management, being able to demonstrate the level of risk the business faces.

Consistency of risk estimations

The Pelican integrated risk management software ensures that risks are evaluated in a consistent framework, yet still retains the ability to review risks within the scale of each business unit or project.

Auditable risk management history

Pelican stores all information, current and past, providing an audit trail of the risk and risk evaluation management processes.

Complete understanding of risks

Each manager, from the CEO right down through the management structure of the enterprise, fully understands the risks (and opportunities) that can impact the part of the business for which they are responsible.

Consistent evaluation of risks

The evaluation of these risks is based on a methodology that is consistent throughout the enterprise and allows the portfolio of risks to be aggregated up through the entity structure of the enterprise.

Coordinated management of risks

The control and mitigation strategies for these risks are coordinated across the enterprise and seek to protect and enhance the value of the enterprise, not just one element of the business..

Shared responsibility for risk

The responsibility for executing the risk management plan is shared appropriately amongst the employees of the enterprise. In essence, employees work as a team. Risk (and opportunity) identification, assessment, management and communication is a shared responsibility and an integral part of the enterprise’s culture.