Building Robust Risk Infrastructure In-House: A Business Manager’s Perspective

When tasked with building a risk infrastructure, a business manager quickly realized the importance of having a robust system in place. Initially, the manager considered developing this infrastructure in-house. However, after thorough research and evaluation, the decision was made to use NEMESIS. Here’s why.

Defining Goals and Objectives

The first step in developing the risk infrastructure was to clearly define the goals and objectives. Understanding what the organization aimed to achieve and setting specific outcomes, conditions, and performance targets was crucial. This clarity helped align the risk management efforts with the overall business strategy.

Identifying Risks

Next, a thorough risk assessment was conducted to identify potential threats and vulnerabilities, including cyber risks, physical risks, and human factors. By understanding the full spectrum of risks, the organization was better prepared to develop effective mitigation strategies.

Developing a Risk Management Framework

Creating a structured approach to manage risks was essential. A comprehensive risk management framework was developed, including policies, procedures, and tools for risk identification, assessment, mitigation, and monitoring. This framework provided a solid foundation for risk management activities.

Allocating Resources

Ensuring the necessary resources were available was another critical step. Personnel, technology, and budget were allocated to implement and maintain the risk infrastructure. This investment was essential to support risk management efforts and ensure their effectiveness.

Implementing Risk Controls

With the framework in place, the next step was to implement risk controls. This involved putting in place measures to mitigate identified risks, such as technical controls, process changes, and training programs. These controls helped reduce risk exposure and enhance overall security posture.

Monitoring and Reviewing

Continuous monitoring and regular reviews were key to maintaining the effectiveness of the risk infrastructure. Systems were set up to track risk indicators and alert relevant stakeholders to potential issues. Regular reviews allowed the organization to adapt the risk management framework to new threats and changes in the business environment.

Engaging Stakeholders

Involving key stakeholders throughout the process was essential for ensuring buy-in and support. Risks and risk management activities were communicated to all relevant parties, fostering a culture of risk awareness and collaboration.

Documenting and Reporting

Thorough documentation of all risk management activities was maintained, and regular reports on the status of efforts were provided to senior management. This transparency helped build trust and ensured that everyone was informed about risk management initiatives.

Technical Steps for Developing Risk Infrastructure

In addition to the business steps, several technical steps were crucial for building a robust risk infrastructure:

1. Risk Identification and Assessment Tools: Implementing tools and software for identifying and assessing risks, such as risk assessment matrices, risk registers, and specialized software for risk analysis.
2. Data Collection and Integration: Gathering data from various sources, including internal systems, external databases, and real-time monitoring tools, and integrating this data into a centralized risk management system.
3. Risk Modeling and Analysis: Using statistical and computational models to analyze risks, including scenario analysis, Monte Carlo simulations, and other quantitative methods to predict potential impacts.
4. Develop Risk Mitigation Strategies: Creating technical solutions to mitigate identified risks, such as implementing firewalls, intrusion detection systems, and other cybersecurity measures for IT risks, as well as physical barriers and safety protocols for physical risks.
5. Automation and Workflow Management: Automating risk management processes where possible and using workflow management tools to ensure that risk mitigation actions are tracked and completed in a timely manner.
6. Monitoring and Reporting Systems: Setting up continuous monitoring systems to track risk indicators and alert relevant stakeholders to potential issues, and developing dashboards and reporting tools to provide real-time insights into the risk landscape.
7. Regular Testing and Auditing: Conducting regular tests and audits of the risk infrastructure to ensure its effectiveness, including penetration testing, vulnerability assessments, and compliance audits.
8. Training and Awareness Programs: Implementing training programs to ensure that all employees are aware of the risk management processes and their roles within them, using e-learning platforms and regular workshops to keep everyone up-to-date.

Comparison: In-House Development vs. NEMESIS

After evaluating the in-house development process, the manager realized that it would require significant time, resources, and dependency on the IT and data science teams. Instead, the manager decided to use NEMESIS, which offered a more efficient and cost-effective solution. Here’s a comparison:

Aspect	In-House Development	Technology Tools for In-House Development	NEMESIS Approach
Data Handling	Manual integration and quality checks	ETL tools (e.g., Informatica, Talend), Data Quality tools (e.g., Trifacta, Talend Data Quality)	Automated data orchestration with multiple relational and file-based sources, data quality, imputation, and outlier removal with scheduled operations
Modeling and Analysis	Requires specialized knowledge for model selection and analysis	Statistical software (e.g., R, SAS), Risk modeling tools (e.g., Palisade @RISK, MATLAB)	One-click model generator accessible to analysts with or without data science background
Result Interpretation	Manual effort to compare results	Data visualization tools (e.g., Tableau, Power BI), Reporting tools (e.g., Crystal Reports)	Side-by-side model result comparison for insightful conclusions
Visualization	Custom development needed for creating visualizations	Dashboard tools (e.g., Tableau, Power BI), Custom development frameworks (e.g., D3.js)	Interactive dashboard for creating charts and graphs with simple clicks, multi-level access controls
Case Management	Separate development needed for handling abnormal activities and monitoring case statuses	Case management systems (e.g., ServiceNow, Jira), Custom workflow tools (e.g., Camunda)	Integrated case management with abnormal activity/case alerts, online assignment operation system, and case status monitoring
Machine Learning	Significant expertise and resources required for advanced features	Machine learning platforms (e.g., TensorFlow, Scikit-learn), AutoML tools (e.g., H2O.ai, DataRobot)	Best-fit model recommendations, suspicious case documentation, self-learning detection capabilities, and auto upgrades
Risk Identification and Assessment Tools	Implement tools and software for identifying and assessing risks	Risk assessment matrices, Risk registers, Specialized software (e.g., RiskWatch, Resolver)	N/A
Data Collection and Integration	Gather data from various sources and integrate it into a centralized risk management system	Data integration tools (e.g., Informatica, Talend), APIs, ETL tools (e.g., Apache Nifi, AWS Glue)	N/A
Risk Modeling and Analysis	Use statistical and computational models for risk analysis	Statistical software (e.g., R, SAS), Risk modeling tools (e.g., Palisade @RISK, MATLAB)	N/A
Develop Risk Mitigation Strategies	Create technical solutions to mitigate identified risks	Cybersecurity tools (e.g., Firewalls, Intrusion Detection Systems), Safety protocols, Physical barriers	N/A
Automation and Workflow Management	Automate risk management processes and use workflow management tools	Workflow automation tools (e.g., Zapier, UiPath), Workflow management software (e.g., Monday.com, ClickUp)	N/A
Monitoring and Reporting Systems	Set up continuous monitoring systems and develop dashboards and reporting tools	Monitoring tools (e.g., Datadog, New Relic), Reporting tools (e.g., Tableau, Power BI)	N/A
Regular Testing and Auditing	Conduct regular tests and audits of the risk infrastructure	Audit software (e.g., ACL, AuditBoard), Penetration testing tools (e.g., Nessus, Qualys)	N/A
Training and Awareness Programs	Implement training programs to ensure all employees are aware of risk management processes	Learning Management Systems (e.g., Moodle, SCORM), Training platforms (e.g., EdApp, AdaptiveU)	N/A

Why the Manager Chose NEMESIS

After comparing the two approaches, it was clear that NEMESIS offered several advantages:

• Time and Cost Efficiency: NEMESIS significantly reduced the time and cost required to develop the risk infrastructure. The entire setup could be completed within 21 days, without much involvement from the IT and data science teams.
• Independence from IT and Data Science Teams: With NEMESIS, there was no need to depend on the availability of the IT and data science teams. The platform’s user-friendly interface allowed the manager to manage risk infrastructure independently.
• Advanced Features and Automation: NEMESIS provided advanced features like best-fit model recommendations, automated data orchestration, and integrated case management, which streamlined risk management processes.

Conclusion

Developing risk infrastructure in-house is a complex but rewarding process. However, leveraging a comprehensive solution like NEMESIS can significantly reduce complexity and resource requirements, providing advanced features and automation that streamline the entire risk management process. By choosing NEMESIS, the organization was able to build a robust system that not only effectively manages and mitigates risks but also empowers managers to leverage the infrastructure for various use cases across the company—including predicting supply chain disruptions in operations, assessing customer credit risk in sales, ensuring compliance in marketing, forecasting employee attrition in HR, and detecting fraudulent activities in financial transactions—enhancing resilience and positioning for long-term success in an uncertain world.