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What are the 5 things a compliance risk assessment should include?

Robyn Ferreira

Robyn Ferreira Answered

Compliance Success Manager


As the pressure to manage compliance risks continues to grow, the first step of any effective compliance risk management strategy is a comprehensive compliance risk assessment. This crucial process helps organizations understand their inherent risks and develop appropriate mitigation strategies. Let me walk you through the five essential components of a robust compliance risk assessment.

1. Identifying Risks

First things first, we need to identify which regulatory compliance standards apply to your business. This involves:

  • Documenting key workflows and systems: Think of this as mapping out your company’s processes, information systems, and transactions. It’s about understanding where you currently stand by conducting thorough reviews and assessments.
  • Engaging with stakeholders: Don’t forget to gather insights from the people who know your operations best. Interviews and surveys with key personnel and employees can reveal the current state of compliance and potential areas of concern.

2. Mapping Potential Risks and Contact Points

Once we’ve identified the risks, it’s time to map them out. This step is all about connecting the dots:

  • Gathering relevant information: Collect data on regulations, standards, and policies that apply to your industry or region (e.g., NIST800-53, GDPR, or HIPAA).
  • Mapping compliance risk contact points: Identify specific operations that could potentially violate applicable regulations. Evaluate how your key processes, systems, and transactions align with these regulations.
  • Documenting potential outcomes: Map the identified risks to their potential outcomes and affected parties. This documentation is vital for audit purposes and sets the stage for effective risk mitigation.

3. Assessing Current Controls

With risks mapped, we need to assess the current controls in place to prevent, detect, and correct violations:

  • Evaluating security controls and processes: How effective are your existing controls and processes in mitigating risk? Identify any gaps where risks aren’t adequately addressed.
  • Considering likelihood and impact: What’s the likelihood of a violation occurring, and what would be the worst potential impact? Evaluate your organization’s risk tolerance and the acceptance of each identified gap.

4. Prioritizing Compliance Enhancement Measures

Next, we need to prioritize measures to enhance compliance. This is where the rubber meets the road:

  • Developing an action plan: Define specific mitigation steps, responsible individuals, timelines, costs, and resource requirements.
  • Ranking program gaps: Rank gaps according to their criticality and the resources needed to mitigate them. Focus more resources on higher-risk areas.
  • Engaging management: Brief management on the action plan and get the necessary approvals to move forward.

5. Reviewing and Iterating the Risk Mitigation Strategy

Remember, compliance risk assessment isn’t a one-and-done deal. It’s an ongoing process. Regularly review and update your risk mitigation strategy:

  • Measuring and monitoring effectiveness: Continuously measure how effective your compliance measures are and make adjustments as needed.
  • Conducting regular assessments: Regular compliance assessments help address new risks arising from business changes, such as acquisitions, entry into new markets, or new customer engagements.
  • Communicating results: Share assessment results with relevant stakeholders and discuss next steps to ensure ongoing compliance.

Critical Risk Characteristics

When conducting a compliance risk assessment, it’s essential to consider four categories of critical risk characteristics:

  1. Legal risks: Violations of laws or compliance requirements can lead to legal consequences.
  2. Financial risks: Harm to income statements, share prices, or future earnings, which can result in legal fees, lost sales from reputational damage, and reduced cash flow.
  3. Business impact: Internal or external factors, such as failed products or political sanctions, that impact business operations.
  4. Reputational impact: Can be measured qualitatively (subjective, using a low-medium-high scale) or quantitatively (numerical estimates of potential harm).

The Role of a Compliance Risk Assessment Questionnaire and Matrix

To streamline the compliance risk assessment process, using tools like a compliance risk assessment questionnaire and a compliance risk assessment matrix can be highly effective:

  • Compliance risk assessment questionnaire: This helps systematically collect data from various stakeholders, ensuring all potential risks are identified and assessed.
  • Compliance risk assessment matrix: A visual tool that helps map risks, evaluate their impact, and prioritize mitigation measures.

Incorporating ISO 27001 in Risk Assessment

For organizations aiming to align with international standards, incorporating an ISO 27001 risk assessment can enhance your regulatory compliance risk assessment:

  • ISO 27001 Framework: This provides a systematic approach to managing sensitive company information, ensuring it remains secure. It includes people, processes, and IT systems by applying a risk management process.
  • Enhanced compliance posture: Adopting the ISO 27001 framework helps ensure that your organization adheres to best practices in information security management, thus enhancing your overall compliance posture.

By integrating these elements into your compliance risk assessment framework, your organization can better navigate the complexities of regulatory compliance, safeguard against potential risks, and maintain a robust compliance posture.

Conducting a thorough compliance risk assessment is a foundational step in your compliance risk management strategy. It not only helps in identifying and mitigating risks but also ensures your organization stays ahead of potential compliance challenges. If you have any questions or need further guidance, feel free to reach out to us at Scytale. We’re here to help!

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