Companies that operate in highly regulated sectors such as life sciences, food and manufacturing are legally obliged to manage risk.
Since all business activities have an element of risk, it is important for organizations to define all their risk areas, assess the scale of each risk, and correctly manage each risk area.
This is commonly done using internal controls frameworks, and by monitoring external sources of risk. However, we believe Integrated Risk Management (IRM), a GRC trend, is a more effective approach, because it brings all internal controls and risk management activities together into one comprehensive methodology.
We recommend that all organizations which are serious about managing their risk, adopt IRM.
What is IRM?
IRM focuses on risk as the foundation from which to develop and build a business strategy.
As a starting point, IRM seeks to comprehensively define all risks, across all business units, key business partners, suppliers and outsourced entities.
Once all risks are defined, a strategy is built to clearly establish the internal controls frameworks for risk assessment, monitoring and response. Importantly it should also define how the IRM program should be communicated to the rest of the organization.
A well implemented IRM will effectively fulfil an organization’s risk management obligations.
IRM 360 view
The aim of IRM is to limit risk occurrences as much as possible which is made possible by a clear risk management strategy, robust internal controls, and a drive to analyse and visualise risk data.
Risk Data Analysis should provide a 360 degree view of risks. This allows risk managers to assess the potential impact of each risk to the organization as a whole as well as to specific areas such as:
By seeing and understanding how certain risks can potentially impact the organization as a whole, and specific business areas within the organization, risk managers are equipped to make more informed decisions to manage these risks.
Communicating IRM throughout the organization
IRM is built around comprehensive risk coverage and transparency that combine three areas:
- technological risk,
- operational risk,
- strategic risk.
Rolling out an IRM program starts with leadership team fully understanding, accepting and supporting the program.
Transparency is key for risk management to be communicated to stakeholders, both inside and outside the organization.
It is important to communicate all risks to leadership, management, operational teams, and other stakeholders, along with clear guidance on how to mitigate these risks. As a consequence, the organization as a whole builds a better system of defence against risk.
Technology to supports IRM
The larger the organization, the more complex IRM will be. The key to success is to choose the right software to manage all stages of IRM.
The Risk Management suite on the AdaptiveGRC platform provides all the functionality needed to detect and manage risks in all areas of your organization.
The use of IRM and a dedicated tool, such as Adaptive GRC allows a “risk-first” approach. This is an agile method to manage risk and ensure total regulatory compliance and transparency.