Process Improvement, Your Data, and Risk Management
- payalgarland
- Jul 16, 2024
- 3 min read
Most organizations, whether large corporations or startups, have internal processes that run operations and deliver goods or services. At some point, and especially during growth or changes in the market, internal processes will need to scale, evolve, optimize, modernize, and become bulletproof to manage risks and enable organizations to continue delivering on their strategy.
For example, processes exist for sales, booking transactions, payroll, hiring personnel, and even managing a company's technology stack, developing accurate management reporting, and managing company risk — all essential processes for any organization in what has become a technology-driven business landscape.
Business and operational processes impact an organization's data and risk management capability. Every business and operational process results in the collection of valuable data, and data, as we know, is critical to any organization's strategy. Further, effective processes and good data quality are crucial in managing organizational risks. Â
Ineffective or missing processes and controls will invariably result in incorrect or missing data, and will impact the risk management capability of the organization.
Therefore, internal business and operational processes are critical to any organization.
Process improvements are most effective when accomplished within set timeframes based on complexity, Additionally, the outcomes must be quantifiable. For example, if process improvements need to occur in 6 months, select critical processes might be improved within that timeframe, and subsequent iterations will include additional improvements.
The following steps provide a foundational framework for process management, which will, in turn, improve an organization's data and risk management.
Process Assessment. An assessment is a health check. It evaluates various aspects of a process, such as its completeness and coverage, effectiveness, and timeliness. (Note, critical processes should be documented as best practice). Take, for example, a bank that lends funds to a company and has a process for disbursing and tracking the funds. Evaluate the following:
Does the process cover all lending scenarios, such as the loan type or loan duration that may require distinct tasks for disbursement?
Are related processes identified and synchronized for updates?
Are all the proper controls and rules in place (for example, are checks in place to ensure fund disbursement is appropriately authorized)?
Is the process up to date and reflecting current business scenarios?
Where manual processes are needed, do the people have appropriate skills and training to execute the processes?
Identify Process Gaps. During the assessment, it is crucial to identify any process deficiencies. The usual suspects are redundant, duplicate, missing, incomplete, time-consuming, disconnected, or manually intensive processes. By identifying specific process gaps, you are taking control and paving the way for improvement.
Mitigate Process Gaps. Rationalize and remove redundant and duplicate processes. Automate your processes when possible. Account for all scenarios. Synchronize with connected processes. Simplify the process.
Automate, automate, automate, especially any repetitive processes. With the evolution of AI and other technologies, there are better options than continuing with manual processes, such as data entry. People should be refocused to define and create the process rules and controls, ensure process accuracy, serve as a check and balance for the automation, identify process improvements, review the results of automated process monitoring, and confirm process effectiveness.
Coordinate all connected processes, which are interdependent and influence each other, with appropriate checks and balances in place. For instance, if the 'Loan Disbursement' process depends on the 'Collateral Update' process, a domino effect chain reaction is bound to occur without the proper coordination. Other examples of connected processes include sales and inventory management or hiring and onboarding processes.
Deploy New and Improved Processes. Implement process revisions, consider pilot programs before large-scale deployment, conduct training that sticks, ensure that people managing the process have the proper skill set, execute change management, and create process playbooks. This forward-thinking approach will bring positive change and improve your organization's operations.
Continuous Process Monitoring. Ensure people and tools are in compliance with the process, that it is effective, and that it is updated routinely for changes. Process improvement results must be measurable and monitored continuously. An independent party in your organization should conduct process monitoring, and critical metrics can be measured using automation. This ongoing monitoring will provide reassurance that your processes are effective and up-to-date, instilling confidence in your operations.
Implementing these process management steps is crucial as they will improve your organization's operations, data, and risk management. Revamped and upgraded processes can reduce timelines, increase productivity, improve risk management and prevent errors, provide cost savings (personnel, regulatory, operational, and risk-related), and support business scalability.
Managing Partner, Canvas LLC
Get in touch with us to see how we can improve or update your processes and impact your operations, data, and risk management.