When running a business, having risks is inevitable though the impact and likelihood of the risks can differ greatly. Risk management is the process of identifying, analyzing and assessing risks and it helps determining the probability of a risk and how to assess it. In recent years, many organizations have realized the importance of risk management to identify and manage the risks that an organization is exposed to. It is an important aspect of an organization’s governance, management and operations
Risk management in organizations
Controls are important to risk management and many organizations are currently working on establishing and documenting internal controls to assess their risks. The great focus on risk management has unfortunately meant that many organizations forget to look at already established controls, meaning that various departments can be asked to perform new controls although they may already be in control and may even have the needed documentation in place. Most departments are already in control – it is just driven by other motives than ensuring correct financial reporting. For instance, the warehouse manager most likely knows what is on stock at all times; only, this is not as a result of the finance department setting up internal controls, but simply because this is a key requirement for the warehouse function.
Control is good, double control is not double as good
Performing double control is a serious waste of resources and it should therefore be avoided. If you work with risk management, make sure to speak to the different departments in your organization about which elements in your risk management that you want to cover and ask about which elements that they already cover.
A control framework should not just be a desk task where there is no contact with the involved departments. Instead, there should be a continuous dialogue in order to create the best workflow. Your organization may even be subject to other control frameworks like ISO, TS 16949, internal quality manuals, etc., which means that plenty of controls could already be in place.
Performing efficient risk management
The same documentation can be needed in different departments, at different times and for different purposes. The same documentation that may be used internally in the organization, may also be required by external partners or public authorities. Providing the different stakeholders with the same documentation is a process that can quickly become time-consuming and ineffective due to the many people involved.
There are several frameworks and guidelines that provide a methodical approach to developing financial controls – and these can be adopted to Impero. Impero provides valuable insights and an overview of how well your organization’s risks are covered with Impero. Impero is a Danish software company that offers an intuitive cloud-based GRC solution with a unique and light-weight approach. The solution helps organizations stay in control in various areas including Risk and Control.