Risk management – how to eliminate root causes of losses by using SAP Analytics Cloud

Business Intelligence solutions used for risk management purposes are based on analyzing enormous amounts of data concerning the activities of any undertaking. Forecasts generated by SAP ERP systems are relied upon to prevent losses at very early stages when specific problems are merely beginning to materialize.

A growing number of entrepreneurs are aware of the fact that taking decisions without a full picture based on data analytics involves certain unnecessary risks. Information about inventory levels, sales results or employee performance not only allows one to identify a potential crisis, but also to plan the relevant corrective measures at the earliest possible stage. Are humans capable of analyzing huge amounts of data? No – we are dealing with thousands of values across hundreds of spreadsheet columns. Risk management and analysis of the company’s standing are best left to advanced Business Intelligence systems.

How ERP systems transform the work of enterprises

Insufficient data analyses and improper IT systems used historically are the most frequent causes inciting businesses to implement SAP solutions. In order to prevent financial disaster, analytic and predictive algorithms of SAP systems are developed primarily with the intention to foresee the outcomes of current activities, impacting all operational areas of a given enterprise.

SAP Analytics Cloud is an analytic tool supporting risk management. Its greatest advantage consists in the ability to collect, verify and analyze, on an on-going basis, information originating from a wide range of sources. These may include databases, e.g. SAP HANA, or other, non-SAP sources. The tools are even capable of processing information from sound files or websites! This means that SAC may be easily fed with data from warehouses, online stores and from an external staff management system, enabling the tool to analyze a comprehensive set of processes in place at the company.

Those who consider SAC to be a mere extensive data library are very much mistaken. The tool analyzes the dependencies between individual elements, enabling it to come up with a forecast for the future at any time. Let us imagine a SAC solution implemented at a car plant. Upon receiving a large order, the system will examine the variables and decide whether the company is capable of meeting the demand, i.e. whether it has the sufficient amount of raw materials in stock and whether its employees are able to handle an increased amount of tasks.

If any problem is detected by the system (such as lack of products, insufficient human resources, etc.), SAP will notify the right persons and will suggest the corrective measures necessary (e.g. increasing stocks, recruitment). This not only facilitates the company’s daily operations, but also minimizes the risk of large losses borne in the future.

Advanced risk management algorithms

How is SAC capable not only of forecasting disasters, but also of suggesting measures to prevent them? It relies on highly advanced algorithms, such as Data Mining or Machine Learning. Let’s take a closer look at these.

Data Mining is a process of analyzing data in a thorough manner. It focuses on identifying regularities and patterns. The decreasing availability of inventories after a purchase made by a customer is one of the simplest dependencies that data mining is capable of registering.


Machine Learning consists in continuous self-improvement of machines and of their processes, based on an on-going analysis of data and on improving their own operating parameters. Machine learning enables software to improve, over time, in interpreting dependencies, and allows it to reduce the time required to calculate an optimized reaction to these.


Advanced algorithms make it possible to create and continuously improve specific patterns. The tool registers even the slightest of fluctuations, and thanks to its high computing power, it is capable of forecasting looming changes and immediately generating a relevant report. As SAC is a cloud-based solution, the results of its analyses are available almost in real time, with the use of any device (including mobile devices), at any location all over the world.

Who makes the decision – SAP and the human factor

Taking business decisions still is and will remain – for quite a number of years to come – the domain of humans. It is the role of IT systems to foresee problems and to suggest solutions. Business Intelligence tools of today are perfectly suited to work in that role.

First of all – the system processes data (which, due to the huge quantities of information involved, is not easy to grasp and use by humans), translating it into clear, legible messages. This is the task of Enterprise Information Systems (EIS).

Secondly – Business Intelligence solutions are continuously in touch with the employees and managers of a company. They notify predetermined individuals of the potentially detrimental effects of decisions taken. Such communication is facilitated by a management module – the Dashboard. This particular module is responsible for visualizing such data as, for instance, KRI (Key Risk Indicators) or KPI (Key Performance Indicators). Clearly structured diagrams may be downloaded onto a mobile device or sent online, which considerably facilitates the process of taking decisions and managing risks at each level of the company’s organizational structure.

Efficient ERP systems are not the only link in the chain of solutions ensuring high-quality communication within the company. Training plays an equally important role, as it provides employees, at a very early stage of working with Business Intelligence solutions, with the knowledge on where to look for the data required and how to interpret the messages generated by SAP modules. When managing risk with the use of IT systems, the trial and error method cannot be relied upon. The skills cannot be acquired “on the go” either. The company is ready to face the challenges from day one.

What should one know about SAP Business Intelligence?

It has already been explained what Business Intelligence is all about. Now, we shall focus on aspects related directly to risk management. You have found out from the article that:

  • you are provided with (plenty of) data presented in easy-to-read diagrams,
  • by relying on cloud services, you may access the data around the clock, from any location all over the world,
  • you may access the data on mobile devices as well,
  • forecasts are created on an on-going basis, so there are no waiting times involved,
  • the system will notify you once any irregularities have been identified or potentially adverse results of the activities taken have been detected.

It is worth bearing in mind that SAP is much more than just IT systems alone. It is a community that tests, analyzes and improves existing solutions on an on-going basis. Such an approach allows solutions such as SAC to be developed on a continuous basis. New functionalities and improvements are offered all the time, thanks to cooperation with SAP Partners and thanks to the efforts of experts and mentors. This means that the solution continues to improve over time!


Managing risk at smart companies consists in much more than just minimizing losses or mitigating the outcomes of disasters. Business Intelligence tools make it possible to eliminate not only the results, but most importantly the root causes of problems – and all that at a very early stage of the process. How is that possible? All you have to do is to stop analyzing, in a toilsome manner, hundreds of different pieces of data provided via spreadsheets, and switch to an advanced SAC tool to perform the task. Take advantage of the computing power of SAP systems to forecast the results of each decision made within your company!


Would you like to find a solution that is tailor-made to meet the requirements of your company? Learn more about the range of Business Intelligence solutions here!


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