Enterprise Risk Management (ERM) is an effective but complex process that identifies, monitors and reports risks across a wide range of an organization’s operations. Some of the best GRC software and risk management solutions provide Risk Registers which are key to organizing an effective ERM policy.
A Risk Register:
- Is a comprehensive list of identified risks
- Estimates the probability of identified risks occurring
- Defines actions taken to reduce those risks
- Establishes who is responsible for risk management
A Risk Register is a document, although within GRC software we can treat it as a repository of information.
It is important for the Risk Register to:
- Be easily accessible
- Allow many people across the organization to collaborate
- Adhere to risk management best practices including the lifecycle of the Risk Register itself
Everything starts with the Risk Register
The first step is to build a solid foundation for an effective risk management process which is done by collecting all ERM-relevant information. Next, establish clear metrics to evaluate and measure each risk across various business units.
What does a Risk Register need as a minimum?
Every risk included in the Risk Register should be briefly defined along with a description of the impact on the organization if it were to occur (for example: costs, image losses), the probability of risks occurring, the risk “owners” and finally, appropriate countermeasures to take.
In case of emergency
The risk register is also a tool for employees to manage responsibility for individual risks. As mentioned above, you can assign risks to “owners”, document how owners respond to their risks, and how effective their actions were.
A Risk Register can enable situation analysis and to generate formal reports. This means that risk managers can measure how effective ERM policies are and implement changes wherever a policy has failed.
Finally, because Risk Registers collect valuable information in an organized and structured manner, managers and leaders can clearly see the full set of risks facing the organization and understand how to manage these risks to achieve organizational goals.
A Risk Register is critical for effective risk management. Any organization serious about effective ERM should understand the compelling reasons to create a Risk Register, which can be further leveraged by selecting the best GRC software platform for their requirements.