A risk-based approach to compliance comprises of identifying risks within the organization and then building a compliance program accordingly. Such a structured approach to compliance monitoring helps in ensuring that the standard of monitoring is consistent across all business areas as well as that all risk areas are properly covered.
Risk-based compliance monitoring
However, in order to plan a full-fledged risk-based compliance monitoring program it is essential for organizations to understand what risks are. A thorough understanding of all the aspects of business process is essential to identify risk areas and conduct risk reviews. In order to establish a risk-based compliance monitoring, it is important to have an understanding of the following:
Identifying business process that involve higher risks
Each business process consists of certain elements of risk. These can be categorized under legal, operational, regulatory, people, reputation or financial. In order to direct the monitoring resources in the right direction, it is important to identify the business areas which are prone to higher level of risk. After the initial calculation of risk indicators, it is advisable to yield additional information by discussing the output with senior management.
Identifying risks specific to each business process
One of the important aspects to be considered before panning out a risk-based monitoring program is to identify the risks that require independent monitoring urgently. This is an essential step to prioritize the risks existing in various departments and create a plan accordingly. A risk-based compliance monitoring program adds value to the business. Therefore, it is worth putting an effort to identify the various kinds of risks that encompass business.
It is imperative for organizations to document risks at each of the levels mentioned above to work out an efficient risk-based monitoring plan. If you want to know more about the risk-based compliance monitoring plan.