If there are issues at your organization that haunt you, and you’re aware of them, it’s time to lay out a plan for addressing them. These issues should be documented on your risk assessment, given a risk ranking and ultimately should flow through to your work plan and flow downstream to the company’s audit plan and into ongoing monitoring processes.
The Circle of Known Risks
Demonstrated in the model below, “known risks” should flow through the “risk assessment/ranking process” to a “decision point,” where the organization determines how to address the risk.
At that critical juncture, it’s time to decide whether you’re going to accept, avoid, control or transfer the risk to a third party. The outcome from the “decision point” establishes what will flow to your work plan. Then it’s on to the audit plan and ongoing monitoring processes. Findings from audits and ongoing monitoring processes then become known issues/risks and then flow back through the same process. It’s cyclical.
Talk to Legal
It’s important to talk to your partners in legal prior to documenting known issues. They will be able to guide you on what to document related to known issues and risks; when something may be put under legal protection such as privilege—for example, work product in anticipation of litigation—and what process to follow before providing this documentation internally or externally—for example, any disclaimers that need to be included, such as “Confidential—For Internal Use Only.” Such information cannot be further disseminated without written legal approval. Carefully think through whom—internally—needs to have access to this type of information, and keep that group limited. One way of approaching internal access is to limit it to those who “need to know.”
Accept, Avoid, Control or Transfer the Risk?
As we all know, there is never enough time, resources or budget to tackle everything at once. As such, the risk score or ranking becomes your map for what to tackle in order of priority. The next step is to figure out what you are going to do about the issues or risks. Are you going to accept the risk, avoid the risk, control the risk or transfer the risk to a third party? If you choose to control the risk, those items will move to your work plan to be addressed.
Important items to make sure that you are documenting are:
- any estimations of cost;
- the business area that is funding the project or any agreements related to budgeting;
- the business owners—senior leaders as well as the people that will be taking on the actual work;
- description of the risk to be addressed;
- any requirements identified that need to be addressed during the project interim controls that are being implemented until the risk can be fully mitigated, and
- target dates.
Why is this helpful? Because going through this process helps you work out your own plan but also may serve as evidence for a regulator that you are focused on the right issues or risks and that you have a plan for addressing them. Being able to show a regulator that you were aware of the risk, have performed a risk assessment and have a plan for addressing the risk should work to your advantage.
Use your documentation to keep leadership informed on risks and to gain resources and budget dollars to address the top priorities. Also, use this documentation to keep them informed of the work you are planning, the work that you are not able to get to and to make sure they are in agreement with where you are focused.
Besides helping your case should a regulator come knocking, documenting your action plan for known issues and risks is extremely important for all organizations because following this simple model will help ensure that you are focused on the right things, that you are applying your resources to the right projects and that leadership stays informed about the important work that you are doing within your organization.