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Office of the CISO: 5 ways a risk assessment can strengthen your business
May 17, 2023
Authored by RSM Canada LLP
Joe E. Reilly, CPA, CA, CBV shared this article
ARTICLE | May 17, 2023
Unidentified and unrecognized risks have a way of causing unexpected—and expensive—downstream effects. And though risk management is not about avoiding risk altogether, maintaining a clear and up-to-date understanding of where and how a company is vulnerable to unexpected events can contribute to business success.
The process of identifying and managing risks is essential for protecting your company from harm, but it can also yield other benefits. By using the results of a risk assessment to inform decision-making and improve internal processes, your company can achieve greater efficiency across the enterprise.
The broad value of a risk assessment
Critical to effective risk management is the flow of high-quality data and information that feeds processes and decision-making. The challenge is deciding exactly what to include in that flow. This is where a comprehensive, organization-wide risk assessment makes an important difference. The following are five key ways your company can use a risk assessment as a starting point for improving company operations and overall performance.
Greater visibility of all risks
At its core, a comprehensive risk assessment provides a clear look at what is going on throughout your organization. Company executives can then use those insights to set strategic priorities, develop appropriate risk management strategies and make the business case for the change and support of all the resulting initiatives. Once this is accomplished, executives can then identify the right people to work on those priorities, which can include cyber resiliency, security monitoring and response, and internal controls management.
A company- and industry-specific road map for managing and mitigating risks
After ascertaining what needs to be accomplished, your company needs a road map to guide those efforts. A comprehensive risk assessment gives executives an opportunity to make sure their plan for change recognizes the unique needs and attributes of the company and its industry, whether that involves Sarbanes-Oxley (SOX) compliance, public sector compliance, service organization controls (SOC) or any other aspect of operations.
For example, a road map can help your company to determine how relevant each risk is to the overall business, then use those insights to develop appropriate risk treatment strategies. While working through this process, evaluating both your company’s current risk remediation capabilities against the risks the company is facing is crucial. The resulting insights will help in setting risk management goals.
Support for digital transformation
As companies continue to make major investments in digital transformation, that commitment must be matched with strong risk management. Quite simply, digital transformation has the potential to create new types of risk while also changing the nature of existing risks, including information protection, cyber risk and compliance, and governance, risk, and compliance (GRC).
Your company can leverage the results of a comprehensive risk assessment to support digital transformation goals while making sure overall risk management is keeping pace in an evolving digital environment. By maintaining the right balance between digital transformation and risk management, you have opportunities to improve in several areas, including managing regulatory compliance more effectively, modernizing and re-engineering risk management activity, and enabling continuous improvement using iterative programs on reporting and workflows.
A single window to monitor risks over the long term
A risk assessment allows your company to develop a single, comprehensive view of risks and risk management capabilities that can be used to optimize operations. This view includes consolidated real-time risk data, an ongoing view of control functioning and potential weaknesses, as well as supporting data that can lend insights into a variety of potential business impacts.
Risk assessments can also enhance board reporting, with the results helping to meet board expectations for insight into the risk landscape and key risk and performance indicators. Private equity firms can also use this level of data to evaluate risks in all their acquisitions.
A clear view of the maturity of risk and controls
A risk assessment increases visibility into your organization’s vulnerabilities. That means you can gain a clear understanding of what is creating risk and how to manage and control that risk. Because they are linked directly to your organization’s actual risks, the resulting internal controls have better and more advanced designs that can improve how well your company performs in risk and maturity assessments, for example.
Risk management as market differentiator
Given what is at stake, it’s not surprising that strong risk management can become a key differentiator in the market. Reaching that level requires risk management that rests on a foundation of strategic and operational insight. The best way to begin this transformation is with a comprehensive risk assessment.
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Source: RSM Canada
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