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

Risk management is not about eliminating risk. The purpose is tounderstand how much risk the company is facing and how it canreduce that risk to an acceptable threshold. Some businesses areturning to data analytics technologies for new insights into wherethey face risks and what they can do to mitigate those that exceedtheir basic tolerance.

Historically, companies have identified assets as risky or ascritical, but they have not been able to quantify the value orliability associated with the risks to a particular asset. In otherwords, they've rated risk in terms of severity but haven't beenable to pin it to a specific dollar amount. For many companies,this limitation has led to challenges in fully integrating riskmanagement into high-level decision-making. Traditionally, riskdata has been reported in a very technical language that executivesdon't understand. Risk analytics changes that by translating riskcalculations into executives' language, where everything ismeasured in dollars.