Season 2  |  Ep. 15: Don’t Wait for the Accident to Happen: Uncover Your Hidden Factories
Podcast

Season 2 | Ep. 15: Don’t Wait for the Accident to Happen: Uncover Your Hidden Factories

April 2, 2024

“If you wait for the accident, you’ll probably be left with a challenge your institution isn’t ready for” - Shawn Ryan, CFO of SRA Watchtower

Hidden factories are prevalent throughout all industries, banking is not exempt. These inefficiencies lurk beneath the surface, silently eroding productivity and increasing risk. In the latest episode of the Risk Intel Podcast the focus is squarely on uncovering these elusive inefficiencies. Host and SRA Watchtower CEO Edward Vincent and guest Shawn Ryan, SRA Watchtower CFO and seasoned expert with over three decades of experience in the field, delve into the critical importance of identifying and addressing hidden factories, particularly in the realm of risk management.

Miss the first two episodes in this series? Click below to catch-up.

The Quest for Discovery

At the heart of the discussion lies the quest for discovery. Shawn Ryan illuminates the concept of hidden factories, describing them as inefficiencies or processes within organizations that are not readily apparent. To combat these hidden foes, proactive measures are essential. To shine a light on these hidden factories and uncover the inefficiencies they pose, a bank should:

  • Ask questions
  • Process map
  • Conduct Kaizen events
"You start by looking at the output that you're trying to deliver... And then you just ask a lot of questions about how you get from the beginning to the end of that particular project or assignment or process." - Shawn Ryan

Shawn and Edward point out that finding these hidden factories must be a conscious decision and effort on the part of the bank. But once discovered and mitigated, can increase productivity and efficiency, while reducing expenses.

Hidden Factories in Risk Management

While hidden factories can manifest in various facets of organizational operations, the podcast hones in on their implications for risk management. In financial institutions, where managing risk is paramount, the existence of hidden factories poses a significant threat. Shawn Ryan emphasizes the need for organizations to identify, measure, and quantify risk across multiple domains. Shawn points out once processes are mapped and the organizations understand where the data inputs come from, they can standardize risk measures to ensure they’re comparable, pull into a central place for easy comparison, and automate the process as much as possible. Through the application of risk maturity frameworks and the standardization and automation of processes, hidden factories within risk management can be brought to light and mitigated effectively.

Optimizing Data Consumption

Central to effective risk management is the consumption and utilization of data. The podcast underscores the importance of aligning data collection and processing with end-user needs. By ensuring that data is readily available, standardized, and presented in a format conducive to decision-making, organizations can enhance their ability to mitigate risk and respond to challenges proactively.

"You want it in the right format and in the right context. That allows the decision maker not to worry about where it came from, not to worry about if it's accurate, not to worry about if it's timely but to... use it immediately to evaluate the decisions that they're contemplating." - Shawn Ryan

Navigating the Role of Tools

In the arsenal of risk management, tools such as an ERM platform can play a pivotal role. However, the proliferation of tools without proper integration can inadvertently contribute to the existence of hidden factories. Shawn highlights the importance of aligning and integrating tools to minimize inefficiencies and reduce errors. By streamlining processes and leveraging technology effectively, organizations can mitigate the risk posed by hidden factories lurking within their toolsets.

"Tools play a crucial role in collecting, processing, and analyzing data... However, the proliferation of tools without proper integration can contribute to hidden factories." - Shawn Ryan

It's a common occurrence that banks can be very siloed, there’s the risk that tools can be duplicative if different silos ask for different tools, with the same end goal in mind. The more tools a bank has, the more risk of transformation errors when analyzing across the silos. By aligning and integrating tools across all silos, a bank can decrease expenses and provide an opportunity for easy risk analysis.

As the episode draws to a close, a clear call to action emerges. Organizations must adopt a proactive stance in uncovering hidden factories and mitigating risk. Waiting for accidents to occur is not an option. By leveraging proactive measures, standardizing processes, optimizing data consumption, and aligning tools effectively, organizations can navigate the complex terrain of risk management with confidence, resilience, and foresight.

Host, Ed Vincent wraps up the episode with a few key points to remember:

  1. Risk exists in multiple domains…you must identify, measure, quantify from multiple places, into a single system
  2. Standardize inputs to be comparable
  3. Use automation to facilitate
  4. Ask if your tools are aligned to work together

Coming soon we will be sharing tangible examples of hidden factories surrounding... program risk assessments, enterprise risk management, and risk and control self-assessments (RCSA) - stay tuned!

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