Risk analytics has been most commonly used in the financial sector, with banks, insurers, brokerages, and credit cards using the practice to predict and manage risk. Over the past decade, however, risk analytics has spread beyond the financial sector. Now, other organizations are also adopting risk-focused techniques in order to improve their bottom lines.
Specifying and pricing risk helps organizations of all types – credit card companies want to minimize transaction fraud, mortgage firms want to minimize default risk, construction firms want to minimize project delay risk, hospitals want to minimize patient readmission risk and insurers want to price premiums based on risk.
By tying risks across an organization, leaders gain a strategic view that can help in two ways: they can develop risk-mitigation measures that are tailored to the organization’s needs and they are able to make decisions at all levels of the company that consider relevant risk.