How to Create an Effective Compliance Risk Management Strategy

Being compliant isn’t a one-time process that covers you indefinitely. When it comes to compliance, it can quickly feel as if the actual work only starts when managing it. That’s where risk management comes into play. Organizations cannot effectively gauge compliance or identify exposure without a proper risk management strategy. To ensure that your organization stays compliant and mitigates any potential risks or violations, you need a strategy – here’s how to create an effective one. 

What is compliance risk management?

Before getting started, it’s essential to understand what you’re protecting your organization from in the first place. Of course, the most evident risk is non-compliance. However, non-compliance and its risks aren’t always easy to spot, especially when technology and cybersecurity threats constantly evolve. 

Compliance risk management involves identifying, assessing, and mitigating any exposure or potential losses from non-compliance with a security framework’s laws, regulations, or standards. A risk management strategy reviews and adjusts all policies and procedures to ensure due diligence regarding data security and compliance. However, as with most things in the world of compliance, risk management is a continuous process and necessary to gauge an organization’s infosec environment continuously and whether or not compliance is up to date. 

Does your company know which policies, controls, procedures, or training modules may need revisiting to ensure compliance? The first step is to create a compliance risk management strategy. Here’s what you need to know. 

How to create an effective compliance risk management strategy

For a compliance risk management strategy to be both practical and sustainable, it must be specific to your organizational policies, goals, and procedures. However, there are certain core elements that all strategies should include. 

Understand the requirements

Clearly define your organization’s duties, obligations, and liabilities in terms of compliance. This includes the roles of employees, investors, and third parties and their impact on your organization’s liability. Once your strategy can clearly communicate this, it’s easier to know what the risk management program needs to prioritize. After that, your compliance risk management strategy should be able to provide a clear and thorough analysis of what’s being evaluated and proof of the assessment. 

Each strategy should include an easy-to-apply methodology for measuring the risk. Depending on the methodology of choice, your risk management strategy can consist of specific risk ratings assigned to each internal and external risk that it’s assessing and the likelihood of the risk occurring. Ultimately, the system needs to be able to clearly communicate all findings in a way that’s accurate yet easy to interpret and apply. 

Identify the risk factors and their controls

As a business grows, so does its exposure and risk potential. To create a robust risk management strategy, it must consider the different risk factors and which controls are set in place to combat these risks. Subsequently, the effectiveness of each control also needs to be tested. When identifying risk factors, it’s essential to consider the inherent and the residual risk factors. The inherent risk is associated with non-compliance before applying any control measures. Residual risk, on the other hand, confirms the amount of risk post-control implementation. 

Continuous staff security awareness training

A risk management strategy is only as effective as an organization’s ability to implement it across the board. Therefore, a risk management strategy should include thorough and continuous security awareness training. Along with risk assessments, staff training is a common mandatory requirement regarding security and regulatory compliance. The most common violations or data breaches occur from negligence or ignorance within the organization, which is why correct training is paramount to the success of your risk management strategy and compliance in general. 

The Breach Notification Rule will apply if your organization is subject to mandatory HIPAA compliance. This sets out strict protocols that must be followed in case of a breach. Continuous staff training should, therefore, not only teach team members how to identify or mitigate risk but also train them to follow the correct protocol in the event of a breach or violation. 

The benefits of compliance risk management

Apart from risk management being a critical component of compliance, there are many other benefits associated with a thorough risk management strategy, including; 

Increased efficiency and resource utilization

Compliance is tricky enough, and keeping up to date with changes in legislation can be time-consuming. A risk management strategy allows businesses to effectively and efficiently adapt business processes and policies when a new risk arises. Through a risk management strategy that continuously highlights any risks or gaps, organizations can also focus on growing their business without spending additional resources to gauge compliance. 

Better decision-making

Knowing how business operations and decisions affect your risk exposure and the liability paired with each decision can be a significant business asset. Through an in-depth and strategic risk management program that includes frequent risk assessments, businesses can make confident decisions and adapt their policies and procedures accordingly. This allows them to utilize opportunities while proactively mitigating any compliance risk.

Protect your business, and your clients

A strong risk management strategy ultimately strengthens your controls and your organization’s ability to protect sensitive assets and data. This not only protects your clients but also protects your business in case of a breach or violation. Although there are harsh penalties for non-compliance, these are significantly reduced if businesses can prove due diligence. Of course, there is always a slight chance of risk, and no risk management strategy is perfect. However, if you can provide evidence of compliance and comprehensive risk management – your organization won’t suffer heavy consequences in the event of a breach. 

Automate your risk management strategy for guaranteed compliance

Your risk management strategy may have been enough last year, but that doesn’t mean it’s right for now. In the past, many organizations could have settled for a reactive risk management strategy. However, as cybersecurity becomes more critical than ever, modern risk management needs to take a proactive approach and stay one step ahead of the risk as best as possible.

One way to ensure that your risk management program is ahead of the compliance curve is to automate your risk management strategy, ensuring that your risk is being managed correctly in real-time, with in-depth analytics, data, and trends. 

See how you can identify and remediate any security gaps with Scytale’s automated risk assessment for SOC 1, SOC 2, ISO 27001, or HIPAA.

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