Risk is the uncertainty of an event occurring that could have an impact on the achievement of objectives. Daily, every organization must manage the risks that threaten to impede the achievement of their objectives.
These risks may be easily identified in practical areas impacting compliance, financial, operational or technology areas of a business. Or risks may be more nebulous in nature impacting strategic areas or your organization’s reputation. Whatever type of risk you’re facing, you should consider the impact and likelihood of occurrence.
Controlling risk can be a very uncertain process. But what is absolutely certain is that all organizations should seek to properly assess specific risks that threaten them if they ever hope to properly manage these risks.
Furthermore, because of increased regulatory scrutiny of risk management, it’s critical that organizations have a robust risk assessment process in place. Fortunately, you probably have mitigated many risks by your control structure, which takes the “inherent” risks and reduces the impact and likelihood down to the “residual” level with which you are currently living.
Clark Schaefer Consulting has a proven methodology for risk assessment which can help your organization identify, classify, rank, and manage risk. Our comprehensive process includes:
- Gaining an understanding of your organization including its structure, key functional areas, services, and marketplace. For an IT risk assessment, this would also include review of the infrastructure including hardware, operating systems, software, cloud services, third party service providers, etc.
- Performing interviews and reviewing documentation to identify relevant risks that may impact critical aspects of your business.
- Categorizing each risk (e.g., technology, financial, operational, compliance, fraud) by its impact to the organization and determining the weighting for each risk category.
- Scoring each identified inherent risk based upon the potential impact on the organization, the probability of its occurrence and a weighted risk factor.
- Obtaining management’s self assessment rating for each control designed to mitigate these inherent risks to their current residual level.
- Developing an overall risk assessment model by ranking each risk.
- Developing a risk management strategy to cover the risk areas working within budgetary constraints seeking to balance management’s expectations with an acceptable risk level.
- Presenting a formalized risk assessment including drill down capabilities and a heat map based on source and impact.