When it comes to risk management, the hope is that the threats that we work to identify and control don't happen. If they do occur, we are sufficiently prepared to manage them, so that we don't experience the negative consequences. If you and your organisation are lucky enough to not have had to face a disaster or crisis, then perhaps you start to think you don't need really need to invest in your risk management efforts. When in doubt, we look to TV shows and movies to help us realise that our lives need a change - it's similar with risk management too!
On a global scale, most risks are changing rapidly with technology and development. Issues that organisations face today haven't been ones that have been experienced in the past - think AI, blockchain, cybersecurity etc. Keeping in mind the exponential rate of change, managing risks systematically and proactively to overcome challenges that arise has become imperative to building trust across your organisation.
When creating an enterprise risk management plan for your organisation, an integral component to your framework will be Key Risk Indicators (KRIs). Key risk indicators measure the potential risk related to a specific action that could negatively affect your company as well as the likeliness of risks occurring. You can think of them as early warning signals that alert your organisation to financial, operational and reputational issues, to name a few, so you can take early action to avoid or mitigate the possible risks. They are typically quantitative, often in the form of percentages, and when detected, serve as an impetus for deciding how to take action.
A massive component of owning or running an organisation is making sure it is in compliance with external and internal regulations and policies in order to protect it from the risks caused by non-compliance. Compliance risk management is the process of understanding and managing compliance with laws and regulations and helping to better manage the risks associated with non-compliance.
In business, there are specific rules and regulations that every organisation and its staff has to comply with in order to operate safely and legally. Not complying with these standards not only poses risks to organisations achieving their overall business objectives but operating as a business in general. As you can imagine, these risks could have a massive impact, so you want to identify the obligations your organisation must be in compliance with to avoid the potential risks. This is why compliance management is so important. At its core, compliance management is the process of managing the planning, organisation and execution needed to ensure compliance with laws and regulations, and in turn, mitigate the risks that would be encountered due to non-compliance.