There are several common stages to effective risk management with multiple methodologies. Grath have studied in depth how clients use our platform and see synergies that align to the following areas:
Governance and oversight is key – data that enables decisions and responsiveness is paramount to firms, with board reporting, escalation routes, and inbuilt processes to ensure visibility and assessment can be made rapidly.
There are many interested parties and stakeholders and this generally starts with an assessment of those roles, responsibilities, and need for information with notification to be clearly defined and supported.
Organisations should ensure their teams, including the board, management, and staff understand their risk management policy, standards, and expectations, followed by a detailed understanding of their risk appetite, goals, and objectives. This should be described in plain language to make it relatable to the audience and ensure full comprehension at all levels.
Risk should not be described or translated into complex processes or tasks that nobody has a comprehension of what or why they undertake activities. Operators and oversight teams need to intrinsically know what they’re looking at and what it means – recognising risks materialising or escalating is critical to adapting behaviours and practices to address issues rapidly.
Understand risk and where it can or does arise – analyse risk across the spectrum of the business – e.g., using the verticals of the industry and the touchpoints of the organisation. Within that, look across strategy, the culture, the business operations, processes and systems, technology, and people and consider all levels of risk – worst case, best case, possible or probable, and document this in detail.
Use a logical but simple way to score and rank risk and show the results in clear, concise, and standard ways – impact, probability, likelihood etc. Finally, you should score the risks from minimal to catastrophic and everything in between.
Assign ownership, clear accountabilities, and responsibilities to managing risk and assessing risks – continuously reassess and challenge the metrics and the outcomes and use different methods to consider risks evolving and growing. Being risk aware means a revisit of assumptions or previous decisions made – have risk owners and risk managers really challenge themselves on how risk was categorised, considered, and quantified at all cycles of review.
Culturally, risk should be a central topic for all vantage points – look through the lens of training and development, ongoing business management, and operations etc. and try to evolve a culture of positive risk awareness and questioning. Challenging risk assumptions and outcomes should be positively embedded and rewarded with recognition and engagement – risk champions in the organisation help to demonstrate that message. Risk forums should be engaging and focused on positives as well as negatives – show the benefits from the risk management processes that you run, as well as showing risks mitigated and identified in play.
Having your team truly risk aware should ensure risk identification and challenge grows exponentially and that can head off any risks in the most effective way.
A risk cannot be quantified or managed unless it is first identified – once identified, it needs active governance, analysis, and monitoring. However, manual oversight is not usually optimum as organisations grow, gain complexity, and drive for efficiency. In our experience automated frameworks enable much more depth and capabilities to firms in this area.
The fact that some risks are unknown or emerging, increases the overall operating and business risk profile of firms without any way to quantify against an established risk appetite and methodology. To try to address this aspect, a robust way to assess and monitor provides firms with the ability to ensure risk identification as an iterative process.
Each risk should be described to a level of detail that permits assignment to a risk owner with clear responsibility and accountability for its management. Tasks and actions to improve risk maturity and further mitigate risks from causing worst case impacts is an effective way to raise the bar in terms of the firm’s risk management capabilities. Knowing what good looks like and establishing that blueprint, with the ability to track progress, see deliverables, and track milestones, timelines, and dependencies is critical to deliver an ongoing program of risk reduction, risk assessment and risk mitigation.
After the risk analysis process is complete, it’s paramount to compare the estimated risks against criteria which the organisation has established.
Risk evaluation is used to make decisions about the significance of risks to the organisation in a highly objective and measurable way to ensure a joined-up approach to risk management across the organisation.
Having a centralised source of risk information is a critical component of effective risk management and whilst many firms still utilise Microsoft Office Suite or similar to inventorize their risk universe and controls, it’s not usually optimal to maintain in this way.
The good news is, it’s not wasted work and at Grath we can reuse your existing spreadsheets and data to ingest to a new, highly automated GRC platform. Grath do not eradicate the work you have already done with generic solutions like Word, Excel, Google Sheets etc. – we leverage those to form your initial configuration.
Talk to us – we can rapidly help you embrace risk management and ensure we deliver you the solution to take your current state to the next level of maturity and beyond.
If you’d like to know how Grath’s technology can help you boost your risk management, then we’d love to talk.
Get in touch with us at grath.com/contact