This chapter is from the book
This chapter is from the book
This chapter is from the book
Risk Register
As mentioned earlier, risk assessments should not be a one-time event. As an organization evolves, change is inevitable. Risk management needs to be part of a framework from which risk can easily be communicated and adapted on an ongoing basis.
A risk register gives an organization a way to record information about identified risks, and it’s usually implemented as a specialized software program, cloud service, or master document. Risk registers often include enterprise- and IT-related risks. With threats and vulnerabilities identified, the organizations can then implement controls to manage the risk appropriately. (The next section discusses these techniques.) The risk register should contain specific details about the risks, especially any residual risks the organization faces as a result of controls or mitigation techniques employed. Common contents of a risk register include the following:
Risk categorization groupings
Name and description of the risk
A measure of the risk through a risk score
The impact to the organization if the risk is realized
The likelihood of the risk being realized
Mitigating controls
Residual risk
Contingency plans that cover what happens if the risk is realized
The items listed here are fundamental components of a risk register, providing a comprehensive overview of the organization’s potential and actual risk landscape. However, to address the dynamic nature of risks, and to ensure an effective and proactive approach to risk management, some other elements are crucial and warrant further exploration.
These elements, namely key risk indicators (KRIs), risk owners, and risk thresholds, enhance the risk register’s depth and effectiveness, ultimately providing a more nuanced understanding of the organization’s risks.
KRIs function as early warning signs for potential increases in risk. By monitoring KRIs, organizations can catch and handle risk escalations before they worsen and have an impact. KPIs measure and showcase trend lines of risk exposure, offering a quantitative means to keep track of risk movements over time. These KRIs, along with other features of a risk register, are an important tool in the risk reporting process across key stakeholders.
Risk owners are individuals or teams designated with the responsibility of managing specific risks. Assigning risk owners is valuable because it not only encourages accountability but also ensures there’s a specific point of contact and decision maker for each risk. It guarantees that the management of each identified risk is streamlined and focused.
Finally, risk thresholds help an organization determine the maximum amount of risk it can tolerate. This is a measure of the acceptable level of risk exposure for the company. Once a risk crosses its respective threshold, it calls for immediate attention. It triggers a response that could include escalated reporting, contingency plans, or mitigation strategies. Understanding risk thresholds helps in laying out a clear roadmap for when and what action needs to be taken against the identified risks.
These items play a significant part in shaping the risk strategy of an organization and provide more context and depth to the typical components of a risk register.
The risk register serves as a strategic component for an organization and helps ensure that an organization’s risk appetite and risk tolerance are correctly aligned with the goals of the business.