If not set up correctly, a risk management programme can actually expose a business to unnecessary risk. If a risk management programme is not embraced by all employees, does not link to accurate data, is devoid of ownership, control & automation, or lacks essential functionality – limiting reporting and risk oversight – it can result in many risks being unaccounted for, and leave the company vulnerable. It could even result in critical business decisions being made based on inaccurate data.
In this blog we explore several ways to ensure your risk management programme covers all bases and fully integrates with your business processes. This is essential to ensure undesirable risks are captured, monitored, and mitigated – and to collect enough risk intelligence to make well informed business decisions.
Risk management should be more than a box ticking exercise by a team who are focused on aggregating risk data and reporting on it. Risk management data should be guiding business leaders toward risk informed decision-making and achieving strategic goals & objectives – while protecting the long-term sustainability of the business. Read on as we talk through the key considerations when setting up a risk management programme that will future-proof your business and promote long-term sustainability.
Eliminate manual processes
The first way to future-proof your risk management programme is to eliminate manual processes. A businesses’ ability to manage the four key stages of the risk management cycle – identify, assess, monitor, and respond – has traditionally been hampered by a reliance on manual processes and siloed data. These outdated tools – such as spreadsheets, emails, shared documents, and folders – are clunky, time-consuming, and error-strewn, restricting access to quality data that drives risk-informed decisions. This lack of efficiency and connectivity deprives your business of a single source of truth and prevents it from establishing a proactive, integrated approach to risk management that informs the entire organisation and its strategy.
Automating risk management through the use of a specialist GRC software tool lays the foundations to build a joined-up, consistent approach to risk management. These tools can be used to build a digital risk register and perform best-practice risk assessments – with all findings captured & logged consistently. You can pull previously siloed data into the risk management tool via API integrations allowing you to report on data and set up automated control monitoring to identify anomalies in large data sets – helping you to understand when you are nearing your risk tolerance.
These intuitive, automated GRC tools widen the risk management team making everyone responsible for risk. Anyone can log a risk, and this gives risk teams and business leaders a much broader view of risk and its impact across different departments. Automated workflows and alerts notify owners of risk, enabling them to instigate remediating actions. The solutions offer real time dashboards & reports, making reporting simple for risk teams – giving them more time to focus on reducing risk, rather than monotonous reporting.
Single source of truth
Risk management programmes that fail to integrate with other core business functions are prone to letting risks slip through the net. Ideally live transactional and operational data should feed directly into a risk management programme to ensure a single source of truth.
When risk teams rely on pulling data from other systems and running reports based on a single moment in time, errors are likely to happen. This reliance on disconnected disciplines, isolated tools, and siloed data restricts the scope of risk management by scattering vital information and processes across multiple systems in unstructured formats – resulting in duplicated, inaccurate or unusable data that hinders decision making.
Mature organisations use GRC software to consolidate their risk data. The latest GRC technology allows you to feed in live business data from other systems and data sources via APIs – yielding deep and accurate insights based on real-life transactional and operational business data. This single source of truth provides a comprehensive view of how you’re performing from a risk perspective and embeds the agility needed to identify issues early and make necessary improvements. The tools ensure data is captured consistently and it enables teams to set rules with automatic notifications to flag Key Risk Indicators (KRIs) and risk tolerances.
It also offers demonstrable proof of a robust risk programme for a complete picture of your risk status, enabling boards to use accurate risk data to make critical business decisions regarding the strategy and direction of the business.
Automated control monitoring
Risk management programmes rely on culminating large volumes of data from across the entire organisation to uncover likely risks and Key Risk indicators (KRI’s). Manually spotting trends or unusual activity within that data is a huge challenge and automated control monitoring can help.
Automated control monitoring is essentially a set of rules that you can pre-define as part of your risk management programme, this functionality is available within most GRC software solutions. As relevant risk data flows directly into the GRC solution, you can set rules on this data to detect risks proactively – based on predetermined rules. Use it to flag unusual transactions & anomalies in data, when you are reaching an undesirable level of risk, or when a Key Risk Indicator is triggered – in fact you can set a rule for pretty much anything!
These rules are linked to automated workflows that send alerts to the relevant risk owner, enabling them to take action. It also equips risk management teams with a comprehensive view of risk across the entire organisation.
Risk detection measures that rely on siloed data & spreadsheets produce unreliable results that perpetuate risk exposure. To instil agility into your risk management programme you need to overcome this constraint, and using automated monitoring of the controls that oversee high-risk operational processes is a great way to add an extra level of policing.
Automated control monitoring within GRC software replaces siloed datasets with proactive functionality that facilitates the detection of risk. Organisations that rely on a disparate approach to monitoring create a disconnected control environment that prevents risk from being detected.
Integrate risk management with strategic planning
If managed holistically, risk management should dovetail with strategic planning to produce a culture of actionable risk-informed business decision-making from the top down. Unfortunately, siloed risk management programmes and teams often lack the strategic foundations to build organisational value as risk is not correctly aligned with the broader objectives of the organisation.
Many businesses consider risk management as a compliance activity, rather than an integral part of strategic and operational planning – and this is just one reason why this unwanted divergence might occur. Other reasons include the adoption of simplistic or overly complex risk management models that don’t align with strategic objectives, a lack of clarity about your risk appetite, and a failure to understand the benefits of integration at board level.
Rather than turning a blind eye to risk, the board and senior executives should empower the business to react proactively by embedding risk management into existing strategic planning processes. This strategic alignment will provide the foresight needed to manage risk in a different way resulting in: risk informed decision-making, increased focus on strategic and external risks, and an enhanced ability to use risk information to adjust business strategy and take calculated risks to work towards strategic goals.
By understanding both the barriers and benefits of integration, you will be well-placed to align risk management with your business’s strategic goals and objectives for a 360-degree view of risk. Having matured the decision-making processes, risk management can be leveraged to help “run and grow the future of the business”, rather than focusing on operational risks.
A holistic GRC software solution will provide the single source of oversight, deep insights, and cross-functional interaction needed to create a risk-informed planning function – with the risk management programme informing the strategy and the strategy informing the risk management programme.
Comprehensive reporting & live dashboards
A fundamental element of efficacious risk management is harnessing information to guide business decision-making. This requires robust reporting processes that provide visibility of your risk profile, compliance status, strategy progression and performance metrics, such as KPIs & KRIs.
Reliance on labour-intensive, error-strewn, and time-consuming manual reporting processes deprives stakeholders and senior decision-makers of the information required to gain an accurate view of your organisation’s risk performance.
GRC software offers intuitive functionality that automates internal reporting and satisfies auditor and regulatory requirements. This accurate information allows stakeholders to spot trends and make informed decisions that drive improvement. By streamlining the risk data aggregation process, time-critical information is reported centrally when it’s needed, with dashboards designed to highlight areas of management interest. Live drillable dashboards provide a real time view of risk & compliance – allowing leaders to focus on problem areas and make changes. Plus, the time saved on producing manual reports gives risk management practitioners more time to focus on reducing risk and improving processes – instead of monotonous admin tasks.
Comprehensive reporting capabilities will certainly allow your GRC programme to thrive and add value, driving effective enterprise performance.
Plan for third-party risk exposure
The network of third-parties businesses use to support their operations – exposes them to an additional layer of external risk. If the suppliers and contractors you choose to onboard lack appropriate controls, their shortcomings could have a detrimental impact on your business – from a data breach to reputational damage.
Mitigation of these risks requires strong governance and oversight of your extended operations. This includes visibility and influence over supply chains and material third-party risks, such as regulatory, cyber, and data privacy. GRC software captures and assesses third-party risk automatically via functionality like vendor questionnaires and vendor portals. This proactive approach to third-party risk management allows you to evaluate and compare suppliers before selecting a reputable vendor and continuously monitor existing vendors from a risk perspective using defined scorecards.
Clearly defined ownership
If no one is charged with overseeing a risk, then by default, the entire business will own it. This lack of accountability creates confusion about who is responsible for managing the risk, causing it to fall through the cracks that open in the prevention process.
Assigning a stakeholder as a risk owner is an important step toward ensuring that a response plan is developed and acted upon promptly. When risk reaches an intolerable level and exceeds your risk appetite, the owner should be notified to act. Risk owners are required to identify, measure, monitor, control, and report on risks, promote risk awareness and reprioritise activities as dictated by effective risk analyses.
Clearly defined risk ownership will reinforce your business against external shocks, encourage proactive risk management through improved skills and capabilities, and – if necessary – make you better able to consume risk.
Risk pervades every corner of your business, so cast the risk management net wide. This is often easier said than done, however, due to the limited resources available to risk teams. To overcome these constraints, risk managers must attempt to transform the business’s risk management culture through worker engagement, participation, and leadership. This collective understanding of the value of risk management and determination to address it proactively will create a risk culture that’s embraced at all levels of the business – expanding your risk response.
A risk management tool empowers the entire organisation to take responsibility for managing risk – from logging a risk to owning a risk – giving risk managers and leaders a much broader view of the impact of risk on different business areas. Its key capabilities ensure employees at every level of your business can capture even the smallest incidents and near misses, which if left unaddressed can escalate – making incident reporting and risk management more accessible, accountable, trackable, and resolvable. This single-pane-of-glass view underpins a holistic approach to risk management that can grow and evolve with your business and engage stakeholders. The transparent flow of risk-related information from the top-down and the adoption of a proactive risk culture from the bottom-up empowers the right people to make the right decisions at the right time.
How to choose the right GRC solution
Don’t assume GRC software solutions are a silver bullet that will magically create a holistic risk management programme that’s embraced by all. You can’t simply flick a switch and solve a problem as complicated as risk management. You must select a platform that aligns with your business and its requirements and take the time to implement it successfully.
On the surface, one solution often looks the same as the next in the saturated GRC software market. So, how can you guarantee your investment will pay off? Don’t just rely on the results of a Google search, which will provide a list of sites comparing generic functionality without considering your requirements. While functionality is important, it shouldn’t be the primary differentiator just because it’s easily comparable – there are other key factors that you must consider:
- Implementation: There’s no one size fits all approach toward successful GRC implementation. To achieve rapid deployment and return on investment you must adopt a structured approach that considers third-party synergy, timelines, staff availability, potential costs of delays, user training, and user acceptance testing.
- Configurability: Choose a highly configurable out-of-the-box solution. The dynamic nature of each business means platforms should be fully scalable and configurable and able to connect to your existing data sources via APIs. Don’t waste time and money paying professional services fees to update dropdowns and fields and configure reports every time a change occurs.
- Security: Implementing any software can expose your business to data security threats, so choose a GRC solution from a reputable vendor that offers IT certifications like ‘Cyber essentials’. This will help ensure company data is stored securely and reduce the risk of a data breach.
To build a comprehensive risk management programme that looks beyond compliance obligations, embrace a holistic GRC software solution that replaces manual processes with a single point of oversight that consolidates disparate processes, systems, and data sources. By choosing the right software vendor to support your risk management programme, you will benefit from deep insights into the risk profile, status, and performance of your business, while enabling integration and cross-functional interaction that fosters a risk-aware culture.
For more insights into choosing the right GRC solution for your business, check out our eBook which provides a “Guide to Avoiding a Failed GRC Implementation Project”.