When you hear phrases like “enterprise risk management software“, it probably sounds a little confusing and hard to understand. Though it is not a term that most people will use on a day to day basis unless they are in the business, did you know that you encounter forms of risk management services often throughout your life without really knowing it? If you did not know that, you are not alone, but the below list will give you a few examples of places you have encountered risk management in your life.
- Have you ever applied for a rental apartment and needed to agree to a background check and credit check before being approved by the management or leasing company? If so, you have been assessed by risk management software. Credit checks and background checks will essentially tell a property manager if you are a good or bad risk to take, meaning are you likely to skip out on your rent, pay late or even be evicted. They can tell this based on records kept about your history and they use this information to discern whether or not you would be a good fit as a tenant.
- Have you ever applied for a credit card and had to wait to see what kind of credit line you would be eligible for? If so, you have been analyzed by a type of enterprise risk management system. Your credit history and payment history is examined as is your debt to income ration and the company is then able to make an informed decision about what kind of borrow you will be. If your risk is low, you will likely be approved for a higher credit line, whereas if your risk is high, they may start you at a lower credit line and assess again later after you have had some time to show your financial habits.
- Have you ever applied for a mortgage loan or other type of bank loan? If so, your bank has definitely assessed your risk. Mortgage and bank loans are often for quite a few thousand dollars so it is important for a bank to be sure that the person they are loaning money to is reliable, employed and has a low risk of defaulting on the loan. Anyone with a history of missed or late payments, long periods of unemployment or low credit might be considered a “high risk” candidate and therefore may not be approved for a loan.
As you can see, risk is constantly being assessed throughout your life. Humans are protective of themselves and their jobs, meaning before they put social, emotional, or financial trust in anyone, they like to make sure that the odds are in their favor for a positive outcome. Though you may not always term it as risk management systems when it comes to your own life, the way that you are assessed at different areas of your life is most certainly an assessment of your risk and potential opportunities for success.