3 Key Takeaways from the 2023 RMIS Report
Last month, Redhand Advisors published their highly anticipated 2023 RMIS Report. The findings in the report were drawn from a user survey that was completed by more than 1,000 risk professionals. Although LineSlip is not a RMIS, our SaaS solution is offered to risk practitioners, so we are very much interested in what the report has to say about the space. Here are three key takeaways from this year’s RMIS Report:
1. More risk professionals are relying on risk technology, but utilization and effectiveness are still lagging.
The 2023 RMIS Report shares that organizations increasingly rely on technology to manage risk effectively. As risks become more complex, companies recognize the need for innovative solutions and are willing to invest in risk technology. As a result, RMIS and RiskTech providers respond by offering cutting-edge solutions and continuing to broaden their capabilities.
The report reveals that businesses, regardless of size, are embracing technology, particularly software-as-a-service (SaaS) applications, to enhance their risk management processes. Already, 80% of companies are utilizing at least one SaaS solution, and by 2025, it is predicted that SaaS usage will constitute 85% of all software used by companies.
Notably, the survey highlights that 75% of respondents anticipate a substantial increase of approximately 12% in their annual expenditure on risk technology in 2023. This represents a significant rise compared to the previous year's 8% increase, indicating a growing realization among organizations about the effectiveness of technology in mitigating risks.
However, despite the increased investment and utilization of technology, the survey also uncovers a prevailing sentiment that businesses are underutilizing their RiskTech tools. This indicates a gap between the potential benefits technology offers and the extent to which companies leverage these tools.
Nevertheless, the market for risk technology continues to expand as risks become more prevalent in today's environment. Organizations recognize technology's pivotal role in reducing overall liability and enhancing compliance. The findings from the 2023 RMIS Report emphasized that it is imperative for businesses to harness the power of risk technology to stay ahead in managing risks effectively and efficiently.
2. There is a growing demand for accurate data analytics.
Data collection is crucial in understanding business risks, but its true value lies in the ability to analyze and derive meaning from it. However, according to the RMIS Report Survey, less than half (46%) of companies consider themselves "very" or "extremely" effective in utilizing analytics to manage risk. This percentage is significantly lower compared to their perceived effectiveness in other system capabilities.
Several factors contribute to this effectiveness gap, including inadequate data quality, governance, and internal expertise in analytics. Many organizations also struggle to integrate data analytics seamlessly into their business processes.
To address these challenges, organizations must invest in improving data quality and governance practices, engaging skilled data analysts, and integrating data analytics into their business processes. The survey also found that many companies are looking to adopt advanced technologies like big data analytics, artificial intelligence, and machine learning within the next three years.
In response, vendors need to focus on providing more advanced analytics capabilities and valuable insights to their clients, which is something LineSlip is committed to. They should also support organizations in maximizing the potential of these tools.
3. Risk professionals are increasingly adopting an integrated risk management (IRM) approach.
Integrated Risk Management (IRM) is witnessing a surge in popularity as organizations recognize the value of a comprehensive approach to risk management. By integrating multiple types of risks into a single system across their operations, businesses can enhance their ability to manage risks effectively and make informed decisions.
This growing adoption of IRM signifies a shift towards a more holistic approach, where organizations no longer view risks in isolation but instead understand the interconnectedness and impact of various risks. By consolidating risk management efforts, businesses can gain a comprehensive view of their risk landscape, enabling them to proactively identify, assess, and mitigate risks.
The move towards IRM reflects a recognition that fragmented risk management approaches may lead to missed opportunities or inadequate risk mitigation. With IRM, organizations can streamline risk management processes, improve risk visibility, and foster a proactive risk culture throughout their operations.
By embracing IRM, businesses can strengthen their resilience, enhance decision-making, and navigate the complex and evolving risk landscape of today's business environment.
The 2023 RMIS Report provides valuable insights into the evolving landscape of risk management. It emphasizes the importance of investing in risk technology, improving data analytics capabilities, and embracing an integrated approach to risk management. By doing so, organizations can enhance their resilience, decision-making, and overall risk mitigation strategies in today's dynamic business environment.
We can't wait to see what else is in store for the risk world!