ERM Software for Financial Institutions

Enterprise risk management software (ERM) systems can be a true game changer for banks, credit unions, and other financial institutions, providing mission-critical tools for identifying and addressing the many threats and vulnerabilities that these companies confront. 

For the financial sector, effective risk management is a requisite for long-term success. By nature, a bank’s business model is rife with vulnerabilities and risks. Threats are continually arising, creating conditions that are reminiscent of a perpetual round of risk management whack-a-mole. Without a well-architected risk management strategy, a bank will quickly fall victim to one or more of the many risks that befall financial institutions on a daily basis. Cybercrime. Theft. Fraud. Regulatory compliance challenges. Even reputation damage. The list of potential risk management issues confronting banks is seemingly endless, making for a very complex risk mitigation landscape that requires continual evaluation and reassessment. Without this, it’s nearly impossible for a bank to remain profitable in the long term. 

Setting Realistic Expectations for ERM Software for Financial Institutions

As you begin the process of developing (or re-developing) your bank’s risk management strategy, it is important that stakeholders and business leaders come into the room with reasonable goals and realistic expectations. Otherwise, you may find yourself in a no-win situation where self-sabotage and inefficiency prevail. 

The reality is that the banking business model is high-risk by nature. It’s unreasonable to expect that you could fully eliminate the countless threats and vulnerabilities that a bank continually confronts. Complete risk mitigation is not a practical expectation for this type of business. But that’s not to say you should throw your hands up in defeat. There are many measures that a financial institution’s risk management task force can pursue in order to knock out those easy-to-mitigate issues, while simultaneously neutralizing threats and reducing vulnerability to whatever degree is possible. However achieving this objective is never easy and straightforward, especially in the financial space. That’s where a financial institution can benefit from a well-architected ERM software platform. 

The Importance of a Risk Management Task Force

The sheer volume and severity of threats that exist within the financial sector make for an extremely complex and challenging risk mitigation effort. ERM software usually proves invaluable with tools, dashboards, and capabilities that are designed to handle the unique set of risk factors that financial institutions must confront. But before you make a single mouse click, you must ensure that you have a risk management task force in place. 

These task forces are charged with risk management strategy development and overall management of the response to threats, risk factors, and vulnerabilities. A risk management task force should include business leaders, key stakeholders, and leaders from the company’s different divisions and departments. A diverse task force composition is important because it allows you to gain insights and information from all areas of the business. This way, you minimize the chances that you are overlooking a threat or area of vulnerability. 

Risk management task force members are key players and they will be the ones who are actually using the ERM software platform.  A task force will spearhead a financial institution’s risk mitigation efforts by identifying threats, prioritizing those risks, planning a response, and monitoring for future issues. Therefore, it’s important that a bank establishes this task force so the members can collectively offer input and feedback during the development of an ERM software system. 

How Does ERM Software for Financial Institutions Help With Risk Mitigation?

The first step toward success is to establish a risk management task force. Once this group is in place, it’s time to work with a development partner who can create a purpose-built platform that meets your financial institution’s unique needs. A custom software system can help with risk mitigation in the following ways. 

Centralizing Data

 The best risk mitigation software platforms feature integrations with other ERM software systems, databases, and other data sources within your company. This information can be pulled into your risk management platform for display on dashboards or inclusion in analytics panels and data visualizations. This data can even be used in conjunction with predictive tools. Data-driven decision-making maximizes your chances of success in the business world and by centralizing your data, you’ll be positioned to make good use of this information. 

Collaboration Capabilities

A risk mitigation software system allows for collaboration and communication as you coordinate risk mitigation efforts. This ensures that everyone remains on the same page and if challenges arise, you will have the tools you need to act wisely and decisively. A project management-type module will serve as a centralized location for your communications and collaborative efforts. 

Risk Management and Monitoring

These ERM software systems feature tools that allow you to actively manage threats and areas of vulnerability. Real-time news feeds and alerts keep task force members well-informed about new, emerging threats and other risk factors, such as new obligations arising from new legislation or regulatory changes. Monitoring the risk management landscape — especially in a tightly regulated industry such as the financial sector — could easily turn into a full-time job. Therefore, a dashboard with a news feed that features the most current and relevant information can be a big time saver. It also positions your task force members so they are well-informed and ready to take action in the event that new problem areas arise. 

Risk Evaluation and Prioritization

To be effective in your risk mitigation efforts, you must understand the dynamics behind each risk factor or vulnerability. Evaluating the circumstances surrounding risk is just the first step, though. You must prioritize these issues so you can plan a strategic response that serves the financial institution’s best interests. The project management-type tools that are found within an ERM software system provide the perfect virtual environment for risk assessment and prioritization. This way, you don’t accidentally focus on a risk with relatively mild consequences when you should be focusing on a more serious issue that carries the potential for downright devastating consequences. 

Developing Custom ERM Software for Financial Institutions and Banks

Not just any ERM software platform will have the tools you need to succeed in reducing vulnerabilities, addressing threats, and mitigating risk factors. For instance, the banking sector is subject to stringent legal and regulatory oversight, with non-compliance being a very real and serious risk factor. Therefore, a bank’s risk management software platform needs to include tools that will allow you to monitor and react to possible legal violations and incidences of regulatory non-compliance. A custom ERM software development project will equip your business with everything you need to deal with these challenges in a fast, efficient manner. 

At iTech, we specialize in the development of technology that will help you make the most of your data and your limited staffing resources. We help our clients leverage today’s most innovative and proven technologies with ERM software systems that are purpose-built with a bank’s goals, pain points, and processes in mind. To learn more, contact the team at iTech today. Let’s begin a discussion on your risk management objectives. Then, our team will get to work developing an innovative ERM solution that places your business on firm footing as you elevate your risk mitigation efforts.