The Three Components of a Successful Risk Analysis.
Keep Risks Top-of-Mind with a Risk Analysis
A good risk analysis provides insight into the impact a risk can have on elements such as the value of the company, the image, the brand and the reliability. To achieve this, the impact of a risk (in relation to the business objectives) is often assessed at multiple levels. Think of divisions, functions, projects and operational units. It often happens that risks which are assessed as important in a department/project have no or minimal impact on the organizational objectives. By structuring risk analysis, risk maps are created on different levels. Linking risks to measures and actions provides the organization with a risk matrix that can be actively monitored. Monitoring and reporting keeps risks top-of-mind.
Three Lines Model
The Three Lines of Defense model from The Global Institute of Internal Auditors was updated in July 2020.
The functions are not only intended to protect the value of the organization, but also to increase it. As a result, we no longer talk about ‘lines of defense’ or ‘lines of defence’.
The goals of the organization are central to all functions. The functions are not silos, but coordinate and work together; each from his own role. The design of the model must be geared to the risks and specific situation of the organization.
The 3LM establishes a stronger link with the objectives of the organization.
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Types of risk analyses
Link Risks to Objectives
The impact of risks on your organization’s value, brand, image and reliability can only be determined by linking risks to objectives. NARIS GRC shows at a glance what impact risks have on objectives. This creates an organization-wide support base and insight into the value of GRC.
Gathering Input from Stakeholders
Stakeholders often have difficulty making a valuable contribution to successful GRC. Converting “their world of experience” into a standard language of risk analysis turns out to be very complex. GRC software enables stakeholders to easily list and prioritize risks. It also helps to arrive at a joint analysis in which elements such as determining probability x impact are experienced as fun. It also contributes to the life cycle of risks and the monitoring of measures.
From Excel Chaos to Overview and Priority
Organizations often start by performing risk analyses in Excel. An excellent step towards a structured approach to risk management! However, this quickly leads to Excel-chaos, and a higher maturity level demands more. GRC software enables growth from risk analysis to risk management through overview, prioritization and control, in form of heatmaps, reports and links with measures and actions – an all-in-one GRC platform.
Monte Carlo simulation
Not all risks occur in full at the same time. With the Monte-Carlo simulation, 10,000 draws are made and statistically calculated what a necessary risk reserve should be. In NARIS GRC it is possible to independently perform Monte-Carlo simulations at multiple levels
As a risk manager, you should especially enter into a discussion about the risks with the organization. With Naris GRC it is possible to vote on risks before and after control measures. This can even be done anonymously to prevent voice influencing. After discussing the differences in perception, you as a facilitator can give a final value to the opportunity and impact.
The 8 steps of risk analysis
Handy infographic about the 8 most important steps
Inspiration around risk analysis.
Today, NARIS GRC announces the launch of their fully updated – and expanded – Governance, Risk & Compliance (GRC) software.
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