When organizations consider new initiatives, one question always arises: What’s the return on investment (ROI)? This question is equally important for risk management programs, especially in a landscape filled with diverse and evolving risks.
According to a recent IBM report, every data breach costs organizations an average of $4.45 million, marking a 15% increase over the last three years. With so much at stake, organizations can’t afford to ignore these potential risks and threats. Getting organizational buy-in, however, requires communicating the critical role that risk management plays within the broader business.
Chief Risk Officers (CROs) and other risk professionals face the challenge of safeguarding their organization, while preventing negative impact and protecting the bottom line.
Measuring the ROI of your risk management program helps translate risk into financial impact, underscoring the value an effective risk management program can bring to your organization.
What is ROI in risk management?
The ROI of a risk management program refers to the measurable value gained from implementing processes that identify, assess, and mitigate potential risks within an organization.
This encompasses both quantifiable aspects, such as direct financial savings from reduced operational disruptions and lower insurance premiums; and qualitative benefits, like enhanced organizational reputation, improved decision-making capabilities, and increased employee productivity.
“When considering ROI, it’s really about resourcing and prioritization. Implementing a common and objective risk scoring scale across the business enables risk management teams to better assess and allocate resources,” says Aaron Peiken, Senior Solutions Engineer at OneTrust.
“It’s not enough to describe a potential risk’s financial impact as high, medium, or low,” Peiken continued. You need to go a step further and provide context. For example, what’s the actual impact when a system goes down? Define it in terms of business days, resources allocated to fixing the issue, potential revenue lost, etc. These details help standardize the risk register for improved resourcing and prioritization.”
