Are You Obliged to Use a Risk Management Software Application?

Risk management software identifies the risk associated with different assets. It then communicates this information to the enterprise concerned, for example through business dashboards displayed on screens. While risk is a factor for every organisation, some are bound by regulations to practice and demonstrate good risk management. Banks are a case in point: they must have enough cash in reserve to cover expenses if issues such as IT failure or fraud affect them. Consequently, many software vendors have produced risk management software or integrated it into their product lines. But does that mean that enterprises are obliged to use such software?

There is a similarity with flight pilots using software-assisted control and navigation. In many of the large or high-performance aircraft produced today, it may simply be impossible to fly the plane without the help of such software. The complexity is such that human beings cannot react appropriately in time to control the aircraft, at least not in extreme circumstances. Similarly, when an organisation exceeds a certain size, suitable software solutions not only make sense to automate the risk management process, but may be the only way the organisation can keep pace with legal requirements.

However, there is another lesson to be learned from today’s aircraft. Even with the intense care and attention that goes into producing the software systems to control them, bugs and glitches can still appear. Some cases are fatal: sensors that fail to communicate the right information and defects that lead to faulty flight corrections have both caused catastrophic failures in the recent past. The moral of the story is that human judgment and commons sense are also still vital components. This is true for any business using risk management software too. Only when human beings and machines work together can we realistically count on risks being managed effectively.