Many businesses might note money, intellectual property and patents, physical property and offices, and even upper-level management as their most valuable assets. However, information is just as important to business operations, and companies should always look to protect these assets.
Modern risk management has grown increasingly complex due to more scrutiny from regulators and shareholders. In many instances, companies will suffer losses because the information was not transparent to relevant decision-makers and risk managers. Essentially, the information adds another potential threat that businesses must account for.
“Because business information is vital to conducting transactions, the link between business risk and record-keeping risk is very close,” explains Barbara Reed, director at Recordkeeping Innovation, “But treating record-keeping risk as an identifiably separate component of risk enables organizations to become more sophisticated, focused and successful in managing risk.”
Records are vital to risk management — records can be used to prove compliance, avoid potential reprimands and fees, and inform business decisions. For example, a lack of financial records can lead to Sarbanes-Oxley Act (SOX) penalties and fines. Records are more than just financial accounts — they can also be related to production, operational, and weather activities.
Records are vital to risk management — records can be used to prove compliance, avoid potential reprimands and fees, and inform business decisions. For example, lack of financial records can lead to Sarbanes-Oxley Act (SOX) penalties and fines.
Risk management revolves around the need to plan for the likelihood of a specific event occurring and having a strategy for dealing with the outcome. However, record risk management can be difficult. Physical records can be lost, and digital records can be accidentally deleted, edited, or accessed by unauthorized individuals. Moreover, as companies transfer physical records to digital formats, there could be errors in the transition process, making recovery more challenging.
Record-keeping risks are also closely associated with management-related issues. For example, failing to share or publish information can lead to poor decision-making. Additionally, poor management could lead to accidental breaching of information security policies.
Extending beyond record-keeping best practices
Record management and risk management are almost synonymous. Businesses need strong record management to maximize the potential of their risk management programs. Retaining vital records is no longer just a good business practice — it’s a necessity. Companies that cannot produce relevant records and information may be found liable for damages suffered by not having those documents available.
Ultimately, proper record management starts at the bottom. All employees must be aware of the importance of safely and reliably storing essential materials. These individuals often feel as if they have the least responsibility; the worst that can happen to them is being reprimanded or fired. However, if a crucial piece of information is lost, businesses could be sued, and executives could even be imprisoned in severe SOX-related cases. It’s up to management to stress the importance of recordkeeping practices to ensure employees know how crucial the task is.
Maintaining meticulous records has become an indispensable aspect of modern risk management programs in today’s rapidly evolving business landscape. Effectively maintaining records is vital for modern risk management programs as it enhances transparency, compliance, and informed decision-making. However, businesses must also be cautious not to hold onto documents for too long, which can lead to legal and regulatory risks. By implementing efficient record management practices, organizations can mitigate risks, improve operational efficiency, and ensure long-term success in risk management.
Making the leap from manual record-keeping to digital files
Another problem many businesses face with their efforts to improve record maintenance in modern risk management is the transition to digitized formats. Although the shift towards technology has been the norm in offices for over three decades, many businesses are still finding new ways to convert physical files into digital ones.
Some types of information can obviously be digitized — for instance, financial accounts and transactions. Conversely, some record types are only now eschewing their paper roots. For example, construction companies are known for having dozens of floor plans that guide the building process. Digital blueprints gained popularity only recently, as contractors and architects can now share files via the cloud and access them through mobile tablets on the job site.
The digitization process itself can lead to many issues. Data can be inputted incorrectly if businesses are manually converting files. Physical records can be lost before digitization is completed. Files can be corrupted if the digital solution hasn’t been thoroughly tested. If companies are trying to set up new systems to automate digital record saving, there are also opportunities for failure. There are a number of intricacies that need to be accounted for.
However, the alternative leaves for a siloed risk management approach, which restricts organizations from achieving their full risk mitigation and decision-making potential. By embracing modern risk management strategies, organizations can overcome the limitations of silos and foster collaboration, resource efficiency, and informed decision-making.
Digitized record-keeping brings significant advantages to modern risk management practices. Its enhanced accessibility, improved security, increased efficiency, and advanced data analysis capabilities empower organizations to identify, analyze, and mitigate risks effectively.
Integrating record management into modern risk management
Modern risk management demands an ongoing process of identifying, analyzing, evaluating, and treating risks. Effective risk management programs should seamlessly integrate record management practices. By prioritizing comprehensive record management, businesses can protect assets, minimize damage, and reduce risks to an acceptable level.
As companies move forward, they must realize that record management plays a significant role in risk management. In the dynamic landscape of modern risk management, effective record management plays a crucial role. Businesses must recognize the significance of protecting their information assets, ensuring compliance, and mitigating risks through comprehensive record management practices. By embracing these principles, organizations can strengthen their risk management programs, foster long-term success, and navigate the complexities of the modern business environment.
Resolver’s risk management software offers businesses a comprehensive solution for effective record management. Our solution simplifies record maintenance, ensures compliance, and enhances overall efficiency. Take the first step toward streamlined record management by booking a demo or joining a product showcase today.
Originally published on February 1, 2013