When organizations hear the words “risk management,” they often seize up with fear that arises from a single question: “How can we possibly make any money at this?” They also struggle with how to justify risk management investment when things seem to be going “well enough” on the loss front. After all, don’t they have more burning issues, such as growing and maximizing profits, reducing costs, and improving revenues?

Now for the good news: with risk, you can have your cake and eat it, too. At least to a degree. Risk management may not be a silver bullet, but you can use it to improve profitability and growth. Information developed in risk measures can be used to optimize processes, which reduces decision time and accelerates execution of transactions or production while improving quality. That same information can help you manage customers better, using targets and guidelines to match customers with the right products at the right price. And finally, you can use your risk information to improve risk-adjusted profitability by offering optimized pricing to better support the risks and costs associated with each customer and product.

For many companies, this is the way to justify risk management capabilities and risk-adjusted profitability measures. It certainly presents a better investment case if you regard risk management as more than a way to prevent losses and manage the aftermath. What if you also view it as a means of improving profitability—regardless of potential events?