Do you need help securing a budget for the risk management software your organization needs? Many teams face the challenge of convincing stakeholders that investing in risk management initiatives is worthwhile — especially when competing demands for funding exist. However, building a solid business case for risk management software can help you make a compelling argument for why your company needs to invest in this area.
How to create a business case for risk management software
When creating a business case for risk management software, building support for your initiatives across the organization is essential. This means getting buy-in from leadership for the solution itself and assembling internal champions for the organizational change that comes with adopting your preferred risk management tools and processes.
To do this effectively, you’ll need to communicate why enterprise risk management initiatives are critical to the organization’s brand and continuous success. You should also demonstrate why senior decision-makers should view your work as an integral, value-add component of the overall business strategy. You’ll also need to explain why purposefully investing in the risk management budget is essential and how you plan to get it all done.
1. Align stakeholders
A business case for risk management helps to align stakeholders by providing a clear and objective view of the potential benefits and costs of the investment, building consensus, and reducing resistance to change. It’s important to involve all stakeholders in developing the ERM business case to address everyone’s concerns and expectations. By involving key decision-makers and demonstrating the ROI of the investment, you can build support and ensure a successful implementation.
2. Get the information you need to make your case
To build a robust business case for risk management software, you’ll need to gather the information that quantifies the importance of risk-related work. Start by answering these questions:
- How much do the most common risks cost your business?
- How much do tangible, frequently occurring risk events impact your business?
- How often does a compliance infraction occur, and what is the average cost (including reputational damage and legal fees)?
- What is the potential cost of the highest impact risks to your business?
- How much would infrequent, disruptive events impact your business? For example, how much would a disruption like a global pandemic cost your company?
- How much, in “hard and soft” dollars, would improving risk management add to your business? Can you quantify the business value by showing the “hard dollars” saved by minimizing events already occurring and the “soft dollar” potential of reducing high-impact risks?
By answering these questions, you’ll have a solid foundation for building your business case.
3. Demonstrate the value of enterprise risk management software
Investing in risk management software requires a significant financial investment, so it’s essential to demonstrate the value to decision-makers within your organization when creating your business case for risk management software. By outlining the benefits and detailing how risk management software can help achieve those benefits, your leadership team can see the value in investing in a risk management solution.
4. Show how risk management software can benefit your business
Many types of enterprise risk management software are available, ranging from basic spreadsheet-based tools to sophisticated enterprise-level solutions. When creating a business case for risk management software, it’s crucial to identify the potential benefits of implementing the software. For example, the software could improve risk identification and assessment, increase cross-functional team collaboration, and enable more data-informed decision-making. Quantifying these benefits can help justify the investment in the software.
A good tip is to also include the estimated costs associated with implementing ERM software — such as the overall cost (e.g., a one-time fee or a subscription-based software), hardware, and personnel required to implement and maintain the system. By estimating the costs upfront in the business case for risk management software, you can determine whether the benefits outweigh the costs and whether the investment is feasible.
5. Evaluate the risks of onboarding new software
Implementing new ERM software will always carry some level of risk. By creating a business case for your risk management software of choice, you can identify potential risks that come with the investment and implementation and develop strategies to mitigate them. Some examples of risk mitigation strategies include providing additional training for staff or hiring outside consultants to help with the ERM software’s onboarding. By evaluating the risks beforehand, you can develop a plan to address them and ensure a smoother implementation process.
6. Be prepared to address common objections
Even with a solid business case for risk management software, you may face objections from stakeholders who are skeptical about investing. Common objections might include:
- “We already have other software tools for managing risk”
- “Risk management software is too expensive”
- “We don’t have the resources to implement new software”
To address these objections, you’ll need to be prepared with well-thought-out responses that show how enterprise risk management software differs from other risk management tools and, ultimately, how it can get better data and visibility into risk. Doing so can help an organization centralize data, see real-time reports, and get stronger visibility into risk trends and opportunities. You should also be able to show how the investment in enterprise risk management software can be phased in over time to minimize any impact on resources.
7. Present the business case to stakeholders
Once you’ve gathered all the information, it’s time to present your ERM business case to stakeholders. Your presentation should be concise and focused on the benefits of the enterprise risk management software, the potential cost savings, and the potential risks of not investing in the software. It would help to highlight the potential benefits to individual stakeholders or departments.
Finally, be prepared to answer questions and address any stakeholder concerns. Having detailed information at hand can help you respond effectively and demonstrate your expertise on the topic.
Get a step-by-step guide to building your ERM business case
Building a business case for risk management software is essential for securing the necessary funding to protect your organization. By gathering the right information, demonstrating the value of enterprise risk management software, and addressing common objections, you can build support across your organization and subsequently gain the funding you need to implement the solution. Remember to be concise, focus on the benefits, and tailor your presentation to your audience — that way, you’ll be well on your way to making a compelling business case for risk management software.
Following the best practices we’ve outlined will help you to create a compelling argument for why your company needs to invest in enterprise risk management initiatives. Building a detailed business case for risk management software means making a comprehensive case to your stakeholders and securing the funding you need to keep your organization safe.
For more information on how to build a stronger case and check out exactly how Resolver’s product works, join an upcoming ERM software showcase or book a demo today.