Risk Map in your Company

There is no doubt that risk identification and assessment (with their risk maps) currently represents one of the unavoidable pillars of management in any company. In an increasingly globalized context exposed to constant changes that can affect companies in one way or another, being able to anticipate situations that may have a negative impact gives them a competitive advantage that will result in the achievement of their objectives.

In this sense, organizations must be able to implement procedures that enable them to identify potential threats that may negatively impact their processes, services, or activities, as well as analyze the control measures already implemented that serve to mitigate the probability and impact in case these threats materialize. Additionally, they must be able to adopt additional measures to reduce those risks that exceed the acceptable risk level for the company.

For these purposes, the UNE-ISO 31000 standard offers a detailed description of the systematic risk management process and provides a series of principles whose compliance guarantees effective risk management. It should be noted that, although this standard is not certifiable, it provides enormous benefits to companies. As the standard itself indicates, “the purpose of risk management is the creation and protection of value, performance improvement, fostering innovation, and contributing to the achievement of objectives”. But what are the principles that must be addressed to achieve this effective and efficient risk management?

1. Integrated risk management: risk management should be an integral part of all organizational activities.
2. Structured and comprehensive management that contributes to coherent and comparable results.
3. Management adapted and proportional to the internal and external context of the organization.
4. Inclusive management that achieves appropriate participation from all involved stakeholders.
5. Dynamic management, as risks can appear, change, or disappear, and the entity must be able to anticipate, detect, recognize, and respond to these changes appropriately.
6. Best available information, both historical and current, as well as expectations.
7. Human and cultural factors that significantly influence all levels and stages of risk management.
8. Continuous improvement.

Focusing now on the risk map creation process itself, it is necessary to point out that it consists of the following stages:

• Risk identification: this phase consists of searching, recognizing, and describing the various risks that may interfere with the achievement of the organization’s objectives. For a correct identification of the different risks, it will be necessary to meet with those people who appropriately know all the information about each of the organization’s areas and/or processes and, therefore, are capable of carrying out this identification process.
• Risk analysis: This is the phase in which “the uncertainty, risk sources, consequences, probabilities, events, scenarios, controls, and their effectiveness” are considered in detail. In essence, it establishes the probability of risk occurrence, as well as the impact of its consequences, through its qualification and evaluation. This is done with the aim of establishing, as accurately as possible, the entity’s risk level.
• Risk evaluation: After conducting the risk analysis, it is necessary to analyze the results obtained to make decisions regarding risk treatment. This analysis and decision phase is called risk evaluation. Generally, four forms of treatment are proposed for the obtained risks:
  • Reduce the risk level by implementing appropriate measures in the organization.
  • Transfer the risk to a third party, either through insurance contracting or directly outsourcing the activity so that the contracted organization manages the risk.
  • Accept the risk, so that the organization takes no action and assumes the consequences if the threat materializes.
  • Cancel the activity associated with the risk, eliminating the probability of occurrence.
• Risk treatment: treating the risk involves selecting and implementing options that allow addressing the risk. This risk treatment implies that for those risks that are not assumed by the entity, a treatment plan must be established that includes the definition of measures to be implemented, deadlines, responsible parties, and description of the activities to be carried out. In this sense, it will be necessary to periodically monitor the execution of the treatment plan to know the current status of the implementation of each measure.

After reviewing the entire process framed in the UNE-ISO 31000 standard, it becomes inevitable to think that, for its efficient and effective implementation in our organization, the use of a computer tool that automates the process is necessary. This is collaborative work between various areas of the organization, where each has different responsibilities, but ultimately, the sum of all of them achieves the final objective.

The benefits of implementing a risk management software platform are numerous. Below, three of the most important ones are highlighted:

1. Centralized identification of all risks that will be subject to analysis. The information obtained from work meetings with different area and/or process managers can be structured in the form of a risk catalog that will be used later for risk analysis. These catalogs will allow having a knowledge base of the organization’s typical risks, which can be reused for new similar areas and/or processes in the future.
2. Establishment of an automated process for risk analysis. Having a software tool, with sufficient integrity measures, will allow the risk analysis carried out by any manager to always yield comparable results, by avoiding modification of their calculation. Additionally, if this process is automated through the sending of evaluation questionnaires, it allows for reduced time to obtain all the information.
3. Consolidation and traceability of all risks. Having all the information centralized in one place allows the complete information of the organization to be consolidated and traceability of the final results to be obtained. Furthermore, the creation and presentation of consolidated reports will be done simply and quickly, in addition to avoiding manual errors in the treatment of information obtained in a disaggregated manner.

Likewise, at GlobalSuite Solutions, we help you implement your risk management system through software, and in this way, it will be perfectly integrated into your organization, achieving the following advantages:

1. You will increase the probability of achieving business objectives;
2. You will improve the identification of opportunities and threats;
3. You will increase stakeholder confidence;
4. You will improve controls;
5. You will assign and use resources for risk treatment effectively and
6. You will improve loss prevention and incident management.