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Do companies need Risk Management?
Risk is inevitable within business environments. Taking and managing risk is part of what organisations must do to create profits and shareholder value. However, DeveloperEye.com, the premiere online information resource for the European application development and IT community, discovered that many organisations neither manage risk well nor fully understand the risks they are taking. This market study aims to discuss the level of knowledge about Risk Management amongst organisations, the management of IT risks, government encouragements towards Risk Management, and the advantages/disadvantages with Risk Management. PR9.NET March 21, 2005 - London, UK, Risk is inevitable within business environments. Taking and managing risk is part of what organisations must do to create profits and shareholder value. DeveloperEye.com, the premiere online information resource for the European application development and IT community, discovered that many organisations neither manage risk well nor fully understand the risks they are taking. This market study aims to discuss the level of knowledge of Risk Management amongst organisations, the management of IT risks, government encouragements, and the advantages/disadvantages with Risk Management. DeveloperEye interviewed 650 organisations (500+ employees) within Europe in order to evaluate the level of knowledge and familiarity with the term; Risk Management. 64% of the respondents had a good knowledge of Risk Management and where able to give us the essence of what Risk Management is all about. Another 31% gave us a fair explanation, but most of them were financial orientated. The remaining 5% of the respondents were unable to give any explanation at all. To fully understand Risk Management, two characteristics are essential: uncertainty and loss. Risk Management can be seen in relation the organisational response of companies to the challenge posed by dramatic changes of the economic and social impacts of natural hazards. Furthermore, Risk Management also involves evaluation of business strategy risks and the achievement of best practices. The nature of Risk Management has changed throughout the years. Traditionally, management were concerned with risk categories like vendor, technology and project related risk. Nowadays, the impact of IT risks such as government regulations and outsourcing have forced organisations to rethink their strategies. Management of IT Risks According to DeveloperEye’s study, most respondents (of whom have risk policies in place), allocate their budget to specific risk categories, and there are few procedures in place to quantify the benefits. As the nature of risk changes from preventing isolated events to management of integrated business exposure, it is time to have a more adaptable approach towards the management of risks. As organisations face an environment of complexity and uncertainty, new Risk Management approaches are required to deal with the rapid environmental changes. Government Regulations and Encouragement The importance of Risk Management can be seen in relation to the government initiative encouraging IT departments to adopt a risk-management program around open source. DeveloperEye can reveal that the regulations have had a positive impact on organisations, as they are now better-prepared and equipped to address risks. Most large organisations follow a policy of Risk Management, the finance sector remains at the top of the classification. What kind of risks does an organisation face? The majority of respondents stated that the dissatisfaction of the customers is the principal risk. Other essential risks are IT, computer security, competitors and the company’s image in the public eye. To respond to these risks, the majority of the respondents had policies in place. The most common measurement is the in-house regular audits of the activities and risks. Secondly, indicators of measurement of the risks, such as incidental, failures and accidents are also widely used. The results showed that it was less desirable to use external people to deal with these risks. Advantages/disadvantages DeveloperEye wanted to disclose the advantages of having Risk Management policies introduced. The results were interesting as factors like control and minimisation of the risks were not regarded as being very important. On the other hand, anticipation and risk prevention was the most important advantages with Risk Management. Cost was the main reason why companies do not want to invest in Risk Management. The study revealed that many respondents were hesitant to change and the fear of ending up with a lot of paper work, made them reluctant to embrace Risk Management. About DeveloperEye.com: DeveloperEye is the premiere online resource for the European application development and IT infrastructure communities. Localized news and events information coupled with technical articles, informed editorial and market studies make the portal and its associated offerings make DeveloperEye the ideal multilingual information resource center. # # #
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About MediaDev MediaDev is a leading global marketing agency with a sole focus on the application development and IT infrastructure market places. |
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