Incident vs. Risk: Which Comes First in Risk Management?

In an ideal world, risks would be identified first so they can be managed before they become full blown incidents – but for most organisations this isn’t always the case. However, there is a clear link between risk management and incident reporting – that if ignored – could leave a huge gap in an organisation’s risk profile, making effective incident handling crucial.

Without a proper incident risk management plan, an identified risk on the risk register will come to fruition and become an incident. In other cases, an unexpected incident will occur and cause so much impact to the organisation that it will be added to the risk register – relevant controls will then be implemented to prevent recurrence. It is vital that risk management, incident reporting, and incident response are fully integrated to understand their relation to each other.

Organisations should define a framework where they can map and understand the linkages between their risk register and actual incidents reported. When done well, this joined up approach enhances a risk management programme, eliminating potential gaps and providing vital insights to guide important decisions around budget & resource activity, and to evaluate the overall impact.

The challenges of managing risk & incidents in isolation

Managing risk in isolation causes blind spots in an organisation’s risk management process – as firms are unable to see which risks materialised into actual incidents, hindering their ability to alert stakeholders effectively. This can cause gaps in reporting that can affect decision making. Misalignment of these processes can also have a negative impact on continuous improvement efforts. If risks relating to incidents are not logged on the risk register and managed, they will continue to happen, and will not be allocated funds & resources to reduce the risk.

Similarly, if a risk reaches a high level and turns into a full-blown incident, it is important to know what impact it had on the organisation and how and when it was resolved, as part of a comprehensive incident response plan. This vital insight can guide decision-makers when they are allocating budget & resources to set controls in high-risk areas, thus helping to minimize the impact of an incident.

A misalignment between risk and incident reporting can also affect regulatory compliance as many frameworks and standards stipulate that organisations must have an integrated process that considers both the identification and management of risks and the reporting and analysis of incidents.

Incident reporting provides real-time data on emerging threats and vulnerabilities allowing organisations to detect and prevent future incidents. Therefore, integrating incident reporting data into risk management processes enables organisations to identify potential risks early, enabling the implementation of proactive measures and prevention strategies to mitigate those risks before they escalate.

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Barriers to integrating risk management & incident reporting

If you are managing risk and incidents using two separate platforms, systems, or processes then it is unlikely you will be able to generate the insights needed to create meaningful metrics that can drive decision making. Siloed teams, departmental barriers, and cultural resistance can also cause a breakdown in communication and prevent the sharing of vital data.

If you are relying on spreadsheets, emails, and manual processes, you will find it almost impossible to make important linkages between the two disciplines. Incompatibility between systems & processes and a lack of automation will make it challenging to share data seamlessly and facilitate the necessary mapping.

Inconsistencies in the way data is captured across risk and incident reporting can also hinder the integration of these processes. Poor data quality and a lack of standardisation can lead to errors and misinterpretation.

A reluctance to share information and the inability to restrict data access can also be a barrier when integrating these functions. Therefore, it is important to define a process that can facilitate a strict permissions hierarchy to get buy in for the consolidation of these areas. This will ensure employees only see the data relevant to their role and responsibilities.

There will also be regulatory obligations to consider when attempting to integrate these vital functions, risk management or incident reporting may have to be done in a certain way to meet regulatory requirements. Therefore, it is important that regulatory requirements are considered as you begin the integration process.

What is the best approach to integrate these processes?

Luckily there are best-practice GRC tools available on the market to make it easy for teams to implement best practice procedures for both risk management and incident reporting that are fully integrated.

Within a GRC platform, teams can easily set up a digital searchable risk register with multiple risk types and categories. Risks are logged via online forms, and workflows are defined for approvals, escalations, and remediating actions. Risk assessments are carried out using online forms that feed directly into the platform. This approach ensures the entire risk management process is centralised and automated, enhancing resilience. 

Teams can set key risk indicators and monitor risk and define a risk appetite and work within it. A full control library can be implemented, and teams can perform control testing and each risk can easily be mapped to the corresponding controls. Each staff member will have their own dashboard so they can see their outstanding tasks & actions and key metrics. 

Lower-level staff might just see outstanding tasks relating to risk assessments and controls checks, middle management will see approvals & escalations and leaders will see a summary of key metrics to support decision making.

In the same platform, teams can then set up a best-practice incident reporting tool in the same platform – ensuring data is captured in a similar format for complete alignment. Incidents, hazards or near misses are logged by employees using online forms with all data feeding directly into the platform. Vital data is captured regarding date & time, employees involved, processes affected, and cost & evidence – such as images, URL’s and files – can also be logged. 

Once an incident is logged, an automated workflow kicks into action to escalate the incident and implement mitigating actions so it can be worked through to resolution. organisations can create different forms and workflow escalation routes for different types of incidents. Management can view real time dashboards & reports to evaluate the source and cause of incidents – enabling them to take proactive measures to reduce recurrence.

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Seamless Integration for Enhanced Risk and Incident Management

But the best part is… the platform can easily integrate these two vital processes. Risks can easily be linked to any related incidents. This enables risk teams to build a more comprehensive view of their risk landscape by understanding which risks materialised, how they impacted the organisation, and how long they took to resolve.  Teams can use the combined data to identify gaps in their risk register by examining logged incidents, hazards and near misses. This will help them to decipher the common source of incidents so they can be added to the risk register. 

It also ensures each risk can be managed with the appropriate controls – lowering the chance of future incidents. The entire process is completely automated, and the standardised way that data is collected ensures accurate reporting metrics that can drive decisions regarding the implementation of controls to reduce risk in high-risk areas. Controls can some in a variety of formats, they might be a regular check, they might be a new policy or procedure, or they might be a new piece of equipment to reduce the risk. 

Most controls require money & resources to implement, the data a combined risk and incident system can generate will guide the organisation – so they understand the amount of money and manpower they should allocate to each risk based on likelihood and impact. Organisations don’t have an infinite pool of money and it is impossible to mitigate every single risk, therefore firms rely on this vital data to inform their decisions.

If you are interested to understand more about integrating and automating your risk management and incident reporting processes, request a demo of the Camms platform.