The latest trends in risk management come as a response to the increasing complexity and rapid technological advances of our times. They aim to meet the ever more acute need for more integrated approaches and faster company reflexes.
The key elements for adopting an integrated approach and ensuring swift corporate responses to risks include: robust risk management software, the Three Lines of Defense framework, specialized GRC tools, AI-driven solutions, identification of ESG and climate change risks, as well as third-party and supply chain risk management.
Let us take a closer look at 6 of the most important market trends!
1. Strategy, the key word!
Linking Risk Management to Business Strategy and Performance! It is the most important factor as it is the driving force of the whole process. The best way to move is to set Management's goal to reduce risks and/or increase potential opportunities. Obviously to implement objective setting you need a very powerful risk management software that produces measurable and documented results and links risks to strategic objectives and action plans.
2. “Three Lines of Defense”
The 'Three Lines of Defense' model is now viewed as a one-way approach. First Line of Defense: Operational Units. Second Line of Defense: Risk Management and Compliance. Third Line of Defense: Internal Audit and External Auditors. So we are moving away from the concept of ERM (Enterprise Risk management) and adopting the concept of GRC (Governance, Risk, Compliance) and obviously the goal is unified reporting. Any other approach leads to ambiguity in stakeholder information, increased likelihood of error, double reporting and endless work hours.
3. Specialised GRC software
Specialized GRC (Governance, Risk, and Compliance) software is essential for implementing the Three Lines of Defense model. GRC software has increased integration and automation capabilities to effectively manage governance, risk, and compliance processes. The GRC (software and services) market size was valued at USD 50.5 billion in 2024 and is expected to reach USD 104.5 billion by 2031, growing at a CAGR of 15.41% during the forecast period 2024-2031! (source https://www.verifiedmarketresearch.com/).
4. Artificial Intelligence (AI):
The adoption of artificial intelligence, machine learning, and predictive analytics in risk management is rapidly increasing—and for good reason. These technologies provide powerful tools for detection and prediction. With AI, large-scale data analysis becomes more effective, leading to more accurate risk forecasting and automated risk detection, ultimately enhancing both the speed and precision of companies' risk management processes.
5. ESG Risks and Climate Change Risks
On one hand, stakeholders are calling for greater transparency and accountability in sustainability efforts. On the other hand, the escalating climate crisis, marked by extreme weather events and evolving regulatory demands, has pushed companies to become more agile in addressing ESG and climate change risks. Rightly so, as those companies that take meaningful, sustainable actions will ultimately thrive in the marketplace.
6. The butterfly effect - third party risks and supply chain
Global supply chains and dependence on third-party suppliers have made supply chain risks increasingly critical. Supplier due diligence procedures are being strengthened to support a more resilient supply chain strategy. A clear example of the 'butterfly effect' in supply chain risk is the disruption in new car model availability due to the semiconductor shortage.
These trends are here to stay, representing a more strategic, integrated, and technologically advanced approach to risk management."
Our E-On RIBIA GRC software is a cutting-edge solution that empowers companies to integrate the latest trends and tools, enabling more effective and efficient management of risks and opportunities.
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