Compliance officers and risk managers must routinely check the health of their organizations to ensure the right balance of risk. A powerful risk management tool allows you to assess the current state of the business and relative risks it faces.
Risk is not inherently bad. Organizations take risk all the time in the pursuit of their business. This strategic risk is a balance of organizational risks and rewards at any given time. Risk assessment helps ensure that risks are proactively identified, qualified situationally and quantified when possible. Risk must be regularly assessed to remain a strategic calculation.
Before assessment begins there must be context. Usually driven by regulations, organizations implement policies and procedures that create context for risk. Potential interactions between risks are also identified and considered at this point. Once risks are identified then assessment criteria can be developed and deployed to subject matter experts for evaluation.
Effective assessments combine a variety of techniques for gathering input. Fill-in answers may be most appropriate in some circumstances while multiple choice may be better in others. Nesting questions is an effective way to hide potentially irrelevant assessment content until it is triggered by a specific answer. For example, question 2 may have 5 follow-on questions if the answer is Yes but 3 different follow-on questions if the answer is No.
Assessment criteria can also be weighted, affecting outcomes based on significance or impact. These weights indicate impact, likelihood, vulnerability, speed or other factors. Finally questions or sections of the assessment are assigned to subject matter experts, allowing simultaneous assessment by multiple individuals or groups.
As assessments are completed, results are presented in the real-time dashboard. Risk managers can quickly identify missing or incomplete sections. They also see how risk is scored for completed sections. Once the input is complete, risk managers produce reports for further analysis and action.
Establish context for assessment. Determine affected policies and procedures that apply. Categorize risk areas.
Divide assessment into areas of specialty. Assign experts to address different risks. Collate results in real-time dashboard.
Not all risks are the same. Weight assessment questions to match overall significance.
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