In business, risk is necessary. Risk is inherent in all of a company's efforts to execute and to meet its goals. The amount of risk a company takes on determines how flexible it can be; how easily it can meet a particular growth target; and which measured, transparent, and calculated approach it should use to get to that target. So, in effect, an organization's tolerance—or appetite—for risk determines how far it's able to go based on market conditions and the external environment.

Risk management is not about eliminating risk. The purpose is to understand how much risk the company is facing and how it can reduce that risk to an acceptable threshold. Some businesses are turning to data analytics technologies for new insights into where they face risks and what they can do to mitigate those that exceed their basic tolerance.

Historically, companies have identified assets as risky or as critical, but they have not been able to quantify the value or liability associated with the risks to a particular asset. In other words, they've rated risk in terms of severity but haven't been able to pin it to a specific dollar amount. For many companies, this limitation has led to challenges in fully integrating risk management into high-level decision-making. Traditionally, risk data has been reported in a very technical language that executives don't understand. Risk analytics changes that by translating risk calculations into executives' language, where everything is measured in dollars.