Can technology really reduce financial risk?

In the fast paced world of modern business we need to make intelligent decisions at speed. Having the access and visibility to the required information all comes down to technology. Without technology, our world would be slower and less efficient – and it has really changed the way we manage our money and make payments.

 

New technologies and the shift towards tools such as the cloud have increased and enable businesses to operate in a way that seemed fanciful only a few years ago. Productivity and efficiency are increasing within businesses thanks to technology and companies have the potential to do more. As a result, the rush to embrace the latest technological advances is understandable.

 

But do the positives include the removal of financial risk? Whether it’s through fraud or a genuine error, losing money is a nightmare for a business and one that many invest time and money in trying to avoid.

 

Why technology could reduce financial risk

 

There is, indeed, a clear argument in favour of technology when it comes to mitigating this risk. Managing your money through software and apps does, at a basic level, avoid the need to filing cabinets stuffed full of paperwork. Having less paperwork makes it harder to lose important documents or that people might see sensitive information by accident (a stray form on a printer or a document placed on the wrong desk).

 

Technology also allows for greater access and clarity too. As a business there are many shades to risk – and one of these can come from losing control. If you don’t know how much money you have you can’t make an informed investment decision or keep on top of your cashflow and you risk making a costly mistake. Accounting software, widely available and affordable for businesses, can ensure businesses are never in the dark in this way.

 

The limits of technology

 

But, there’s still scope for this to occur with technology, of course. The wrong system, implemented in the wrong way without added security is every bit as bad as a dusty old filing cabinet. Encryption, controlled access and safe storage are the online equivalents of a lock and key and are essential if you want to protect access to sensitive financial information.

 

Any technology is only ever as good – or risk-free – as the people who use it. Without training, your employees might struggle to use technology safely or effectively and the benefits will be lost (or even turned into risks).

 

It’s fair to say, therefore, that technology can reduce financial risk. But, just because it can it doesn’t mean it will. If you use it poorly then it’s every bit as risky as offline financial security measures. The key is to pick the right technology and ensure employees are trained in the ways to use this effectively. That way, ‘safety’ can be added to ‘speed’ and ‘efficiency’ in the list of benefits to be had from embracing technology.