Recalibrating Enterprise Risk Management in Response to Crisis

COVID-19 and its impact have demonstrated that change can be rapid, disruptive, and non-negotiable. This is especially relevant to enterprise risk management, where the challenge can be summed up in one word: recalibration.

Many financial institutions have been investing in model-driven analysis and data-anchored approaches. We know that the models themselves must adapt as situations change. But what about the processes and policy governance that surround these models? Organizations will need to recalibrate how they manage risk with the same ease and speed.

Greater Scrutiny Requires Greater Visibility

Financial institutions are already well-versed in the basics of enterprise risk management (ERM): identifying risks, determining controls for mitigation, documenting approvals, and periodically reviewing and revising risk-related policies. However, the current economic outlook and simultaneous shift to new ways of working (especially remote work) is pushing auditors and regulators to greater levels of scrutiny, particularly in the areas of credit risk, liquidity management (including stress testing), and security against data breaches. Withstanding shocks and emerging stronger in the post-COVID-19 era will require a sharper focus on high-risk areas and regulatory audits.

Commercial off-the-shelf (COTS) solutions have become a necessary part of the ERM ecosystem. Yet many are weak in the “enterprise” part of ERM because they lack adequate workflow capabilities, or risk and control owners find them difficult to use. Financial institutions may fill in the gaps with spreadsheets and emails, which can be problematic when it is time for an audit or regulatory exam. COTS also may have a slower pace for handling things like government stimulus programs and new risks and controls associated with them.

Appian Delivers Visibility, Flexibility, Ease, and Efficiency

Appian’s low-code automation platform addresses these challenges and more. With Appian, risk management teams can easily identify, categorize, and prioritize risks; identify system and procedural controls; document approvals; and periodically review and revise their institution’s risk-based policies. Teams can also map incidents to risks and controls as the incidents occur, ensuring currency and completeness.

Particularly in today’s constantly changing environment, financial institutions need a flexible solution that gives them a clear and actionable review of risk policies and frameworks. Once in place, they can factor the impact of current events into ongoing stress testing and capital management.

Visit the Appian financial services resource center to learn more.

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