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  • Archer

How Increased Global Connections have Exposed Organizations to Risk

The world is increasingly connected, and organizations are more exposed to the risks and rewards of other enterprises than ever before. Physical supply networks, digital communications, and integrated business systems have reshaped the risk landscape. The pandemic has reinforced for all of us the complexity of modern organizations, and the need for close coordination across departments and disciplines in response to a crisis.

Operational resilience can no longer only consist of the BC/DR function (Business Continuity and Disaster Recovery) that builds reactive recovery plans that are only dusted off during infrequent geo-specific or IT disruptions. An organizational continuity plan that articulates a localized disaster recovery process may not map onto a global disruption. Furthermore, an IT problem isn’t just an issue with the organization’s computer network when infrastructure and physical assets are always connected.

The need for a holistic and fully integrated view of risk management has been thrown into focus by the pandemic. The consequences of unmanaged risk for any organization are extensive, and as risk continues to grow, executives and board members are increasingly becoming more involved in risk management initiatives. More and more organizations have begun to integrate risk management into their day-to-day operations.

Risk is changing so dramatically across so many areas that siloed and manual processes make it difficult to get complete information to stakeholders quickly. Even the most successful point solutions will only magnify this challenge, with information stored in different locations and used in different ways by each department. This is exactly why our customers see such value in managing multiple dimensions of risk on one platform, in fact almost 80% of our customers manage multiple domains of risk on Archer.

An organization that has fully adopted and empowered integrated risk management practices and processes may be forced to contend with third-party risks that are beyond the direct control of the organization. To find out how managing vendors and suppliers outside your walls can increase operational resilience and actually drive growth, download our latest report, “The State of Integrated Risk Management”.

Increased Exposure to Supply Chain Disruptions

The connected global economy has exposed an increasing number of organizations to risks outside of their traditional domains. Even if an organization was able to formulate and properly categorize a BC/DR for the countless eventualities that can disrupt operations, recognizing emerging risks and promptly shifting into disaster recovery still requires risk management to be deeply integrated into an organizational framework.

Local and global disruptions have gone from being blue-moon events to being business as usual. As the risk profiles of more and more organizations expand, being able to continuously manage risk becomes more integral to every level of operations. Accordingly, risk management has become central to the scale and scope of operations.

We’ve found that for many organizations, anticipating, recognizing, and managing risk has become a critical component at every level of operation. Our experience with organizations that use Archer gives us an understanding of how organizations have responded to the challenges of the past year. Over 60% of respondents in the 2020 RSA Digital Risk survey stated their companies' integrated risk management programs were somewhat or quite extensive. Compare that with only 7% of respondents stating that their organizations did not have any sort of integrated risk management programs or procedures in place, and it’s clear that risk management is a priority in today’s organizations.

Global Changes and Operational Risk

Climate change has turned once-in-a-lifetime events into regular occurrences. Some regions are expected to experience 100-year floods nearly every year (1). In the summer of 2021 the Pacific Northwest of North America, a region so mild that most people do not have air conditioning, saw temperatures reach over 120 degrees Fahrenheit. Previously unthinkable weather disruptions are now commonplace, causing unmanaged disruptions. Catastrophic flooding that washes away industrial centers, heat waves that melt power lines and roads, and ice storms that freeze gas lines all have the power to throw supply chains into chaos. Even an organization that uses multiple vendors to help ensure operational resilience will still be out of luck if all of the vendors are disrupted at the same time during a global catastrophe.

Sophisticated state-sanctioned cyber warfare has brought disruptions to more and more organizations. The 2020 SolarWinds attacks (2), in which Russian hackers compromised the networks of over 18,000 organizations, is just one example. In this case, the target seems to have been the networks of the United States government, but since the attack involved hacking the software update server for all users of the SolarWinds Orion platform, many non-government networks were also compromised.

Early in the COVID-19 pandemic, a shortage of N95 masks highlighted the risks of an interconnected and international business environment. With scarce information about what kinds of preventative measures could limit the spread of the virus, N95 masks were shown to be effective at reducing transmission. Compounding the panic buying that nearly eliminated inventory for the masks was the shutdown of international borders, as the medical-grade wood pulp used for the masks was produced in Canada (3). Any organization that relied on face-to-face interactions to achieve its operational goals was forced to choose between stopping operations, continuing operations while putting personnel at risk, or having to pay exorbitant prices for increasingly scarce face masks. Organizations without an established framework in which to quickly compare and make decisions about operational, compliance, and financial risk suffered.

Organizations must routinely plan for and contend with risks that previous generations would consider to be outside of the realm of possibilities. That’s why we recommend organizations manage risk by coordinating efforts across organizational domains, such as resiliency, audit, compliance, IT, and operational risk. Instead of assuming any given eventuality will occur in isolation, to be addressed alone, modern organizations will soon recognize that multiple disruptions can occur simultaneously.

Operational Resilience is the Primary Motivator

We recommend organizations approach risk domains holistically by connecting the risks seen in day-to-day operations to the implications of those events to the business strategy. 1 in 5 of the respondents in the 2020 RSA Digital Risk survey stated they are prioritizing the alignment of business resiliency and enterprise risk management approaches in the next two years. An organizational culture that relies on processes and procedures to deliver operational resilience is not enough. Global risks cannot necessarily be managed with the same processes that work for internal or even vendor risks. Learn how to not only respond to global risks outside of your four walls but to actually turn risk to your advantage in our report “The State of Integrated Risk Management.”





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