Risks reported by operational teams are usually consolidated and drafted in a corporate risk register that keeps a record of all the risks that arise throughout the enterprise. However, a static risk register is not considered by many to be an effective way to manage and mitigate risks and compliance challenges. Moreover, these risks need to be tracked and monitored at different levels, requiring multiple levels of hierarchy-based access and ensuring that the most important of all enterprise risk and compliance challenges are addressed first.
Align Operational Risks, Enterprise Risk and Compliance
Simply delegating operational risks from all divisions and processes to the corporate level is not the best possible approach. There needs to be ranking and calibration of risk through ratings.
Why the need to differentiate?
Operational risks and enterprise risks are different as they both need different approaches to resolution. For one division an operational risk may be high priority needing immediate resolution, but at an enterprise level, it might not have the same level of urgency or prominence. Since financial and human resources are limited, they need to be allocated properly, reinforcing the need to adjust and assign risk ratings so that some important risks are not sidelined while less important ones are addressed first.
The Need for a Risk and Compliance Management System
So what can an organization do to align the different levels of risks keeping in mind their severity at both the operational and enterprise level? The first implication is that a simple system of keeping, maintaining and managing a spreadsheet of risk register is outdated and not accurate. This is where the need for a risk-based compliance monitoring plan arises which can add an additional layer of ratings to the same risk and intuitively manage any challenges that may arise.
What an organization actually needs is a system that does not just provide software compliance tools that identify current known risks, but can also anticipate new unknown risk through regular monitoring and pattern recognition and helps the executives make better, informed decisions. This required adequate foresight and an intuitive system that can create awareness of what the organization’s strategic operational objectives should be.
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