Management of risks is essential for companies of all types or sizes to alleviate their impacts on their business and prioritise actions to prevent them. Risks can either emerge in the routine processes, business assets, materials or equipment used, or the end products/services provided by your business. Apart from these, there may be environmental risks, workplace risks, information and cyber security risks, compliance risks, or financial risks that can equally disrupt your business operations. Therefore, there is a need for effective governance of risks to help your organisation operate consistently. While risks are widespread in a business, an audit checklist for risk management is a helpful tool to ensure that you have evaluated each aspect of your business to manage the potential risks. With a comprehensive checklist in hand, you can know all the areas, assets, or processes in your organisation that should be checked to identify the risks. Therefore, after ticking off everything from the checklist, you will have all the necessary information to develop your framework for risk governance.
The following section presents the checklist for risk governance in a few brief points. Even though creating the checklist can be an exhaustive process in some cases, we have compiled a few key sections to help you.
At first, you need to make sure that your organisation has a strategy i.e., a set of processes for identification of the risks. There must be a separate risk register where details of all risk assessment activities conducted on various processes, assets, workplaces, and key areas of the business must be recorded with reference to the time. Maintaining a register also helps you to keep detailed records of your foreseeable as well as existing risks. Hence, you can prevent the situations causing them to occur again in future.
To make the management of risks effective, what you need is an established risk governance policy and some specific internal controls or procedures to comply with it. Hence, you need to ensure that your management team has formed a policy that gives an idea of your risk governance scope and objectives. Secondly, confirm how various controls or procedures for managing risks should be implemented. Has the management team outlined them to the employees (risk assessors and managers) who would be responsible for addressing the risks? Also, you need to state how frequently the policy should be reviewed and updated to ensure the controls can even address the newly emerging risks.
This point of the checklist is about learning whether you have established accountability of the risks and given authority to dedicated members for managing them. For that, you need to identify who is the owner of the risk i.e., persons who handle the process, asset, or area of the business where a risk is identified. Assigning responsibilities helps in prompt management or treatment of risks. If the members or employees know that they are accountable for a specific risk, they tend to be alert. They would run frequent assessments and have response/recovery measures ready for the probable risks.
You need to ensure that your management team has properly allocated the resources that are required for managing the risks. Resources, in broad terms, mean the tools, information, and persons required to identify, assess, treat, remove, or transfer the risks. You should hence ensure the assessment methods, tools, information, communication mechanisms, reporting systems, and any external parties required for managing risks are ready. You should also ensure that the employees who are accountable for handling the risks are trained adequately.
Lastly, you need to confirm whether the different risk controls implemented are upgraded from time to time to improve your risk governance. Ensure that you have proper indicators or metrics to measure the performance of your risk controls. You need to measure the performance metrics against the proposed objectives. If the metrics are found inadequate compared to the intended performance objectives, you can revise the risk policy and implemented controls. Therefore, you need to ensure proper periodic evaluation of your risk policy, management framework, controls, and measures to identify the inefficiencies. It would help you continually improve your risk governance approach.
The audit checklist for risk management works as a comprehensive self-assessment tool for organisations that helps to find out, assess, and reduce/remove the different risks that could disrupt their business or damage their reputation. The above points explain the key aspects that you should consider for effectively managing risks in your business. They are the elements that are required to develop a strong framework for the governance of risks. Following the checklist ensures that the management directors, process owners, and executives at all levels of your organisation have a shared understanding and responsibility for the risks.
If you have an internal audit upcoming in your organisation for risk assessment and management procedures, Compliancehelp can assist you! We have a team of expert internal auditors with specialisation in ISO management systems. We can help you perform your audit process efficiently to ensure the establishment of an appropriate management system for controlling risks.
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