¿Qué medidas puede tomar para garantizar un seguimiento y una notificación de riesgos eficaces?

To ensure effective risk monitoring and reporting, start by establishing clear risk criteria aligned with risk appetite statements, defining the level of risk your organisation is willing to accept. Implement a robust risk assessment process to identify and evaluate risks against these criteria. Use Key Risk Indicators (KRIs) to monitor risk levels and set thresholds for when action should be taken. Regularly review and update the risk criteria and appetite statements to reflect any changes in the business environment.

One thing to keep in mind here is the context to your business. The impact may be different on different parts of your business. And as such, the risk tolerance may vary depending on your business priorities. Consider things like asset values and revenue streams as your evaluating risk criteria.

Effective risk monitoring and reporting hinge on the strategic use of Key Risk Indicators (KRIs). To ensure effectiveness, first identify KRIs that are closely aligned with the organisation's specific risk profile and business objectives. These indicators should be quantifiable, relevant, and provide early warning signs of increasing risk levels. It's important to set clear thresholds for each KRI; when these thresholds are breached, it should trigger an alert or needing a response. You also need to regularly review and adjust KRIs to reflect changes in the business environment or risk landscape, maintaining their relevance and effectiveness.

When considering your tools and methodology, be sure you’re able to see the impact of other foundational elements of your business on risk. Are there compensating controls that make the risk less impactful? Are there open audit findings or vulnerabilities that make the risk more likely? Connecting these elements ensures you can make data driven decisions about risk.

While it is essential to review risks regular intervals, risk should not be a point in time or annual activity. You must put processes in place to view risks in real time. As controls are tested or as vulnerabilities are identified, risk should automatically increase. Don’t wait for a regular risk review for scores to be updated.

One key element to report is “risk over time”. Being able to show the performance of your risks and their relation to tolerance over time highlights your ability to manage risk at an acceptable level over a period of time. And, if risk goes about the threshold, you’re able to demonstrate what you did to bring it back behold tolerance.

Clarifying the risk associated with each Key Risk Indicator (KRI) is vital for ensuring the audience understands how each KRI connects to business risks. By linking KRIs to specific business outcomes or objectives, stakeholders can understand the real-world implications of these metrics. It helps decision-making, as stakeholders can understand the potential impact of risks on the business and allocate resources more effectively.

Digitalize this now critical operational area and make accessible to stakeholders as well as those accountable. Institutionalize this area as a regular sub-committee of the Board of Directors, with a report of findings appearing in shareholders' reports.