Is there really a correlation between effective risk management and profit margin growth?

The relationship between risk management and profit margin growth is stronger than correlation, it is cause and effect. You can guide risk management in support of profits and push them higher.

tight rope finance

Everyone knows that IT is a cost center. What many people don’t know is that recognizing and leveraging the connection between security risk mitigation and profits can create profit margin growth.

While 73 percent of executives surveyed believe risks are on the rise, according to the new survey, “Risk in review: Decoding uncertainty, delivering value”, PwC, April 2015, only 12 percent of those are successful risk management leaders. Over the most recent three-year stretch, 41 percent of that 12 percent produced an annual profit margin growth of more than 10 percent, according to the survey. Risk management doesn’t simply mitigate risk, it magnifies net income.

CSO explores the relationship between risks and profits and how enterprises can use information security risk management to increase profit margin growth.

The risk management & profit margin growth relationship

“Information security risks affect profit margins by impacting enterprise reputations, share prices, and the ability to operate effectively,” says Bill Sweeney, Financial Services Evangelist for BAE Systems Applied Intelligence. Good risk managers and management methods can counter that impact, producing profit margin growth.

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