In 1958, IBM researcher Hans Peter Luhn first introduced the term business intelligence (BI) in an article he contributed to the IBM Journal. He described business intelligence as "the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal." Cleary, business intelligence plays a key role in risk management providing executive level decision-makers the ability to look across all categories of risk (in different business units, categories, geographies etc.) and providing a global view into business performance and risk exposure.
Business Intelligence and risk management are linked on two levels. First, when used in conjunction they provide executive level transparency into risks within the organization, and secondly, they provide product planners and corporate strategists a risk-adjusted performance view.
If you’re considering a risk management solution, you might want to listen to a recent IT-Finance Connection podcast on the role of business intelligence in risk management. Additionally, here are some tips on leveraging risk management practices to provide stronger and more introspective BI analysis:
- Identify and eliminate risk factors and exposure points within the organization to create a strong foundation/base.
- Examine opportunities related to taking strategic risks within the business (new products, launches into new geographies/industries, M&A, etc.).
- Asses the potential risk exposures tied to moving forward with strategic company direction and initiatives.
- Apply this risk management analysis to your overall business intelligence framework to provide executive management/management board with a clear view of not just the company’s risk exposure (and where risks have been eliminated altogether) but where there is an opportunity to take strategic risks with the added layer of business intelligence needed to make smarter business decisions.
Check out our recent podcast for more details.