Every successful risk management program works by identifying, analyzing, prioritizing, and mitigating risks. In most enterprises this process is repeated at regular intervals, so that organizations can generate data each time about the threats to business operations, the risk those threats pose, and the steps necessary to reduce risk.
That is an enormous amount of data a company must track. To do so — and to do so smartly — companies can build a risk register. In this article we’ll cover understanding risk registers, their relation to risk management, the benefits of a risk register, and how to build one that supports your risk management needs.
Understanding the Concept of Risk Registers
A risk register, also called a risk log, is a tool businesses use to document and track risks across the organization. Envision a spreadsheet or database document that lists the risks you face, along with a variety of relevant factors for each one.
Building and maintaining a risk register is integral to the risk management process — and like many other elements of risk management, it works best when done continuously. Risk registers can help your business identify, analyze, prioritize, and mitigate risks before they manifest into real challenges for the organization.
The most effective risk registers include all the information you can collect about every threat that could pose a risk to the business. That includes the nature of the risk, the disruption it could cause, and what mitigation measures or incident responses are in place. Ultimately, a risk register should tell an organization everything it needs to know about each risk identified.
While every risk register will vary depending on the organization and the scope of its projects, every risk register template should include several items:
- Risk identification. This could include a name or an identification number to identify the risk. Commonly it has variables such as a date or a subtitle to identify each specific risk, if necessary.
- Risk description. Providing a brief description of the risk helps determine why the risk is a potential threat. A risk description should be short, concise, and provide a high-level overview.
- Risk category. Each risk is assigned to a larger category such as budgetary risks, external risks, security risks, compliance risks, and so forth. This is done by categorizing and evaluating where the risk derives from and determining remediation.
- Risk probability. This involves deciding how likely each risk may occur. Using qualitative measurements such as “not likely,” “likely,” or “very likely” can help categorize risk probability. Other, more quantitative measures such as calculated percentages to determine likelihood can help estimate risk probability.
- Risk analysis. Analyzing the potential effect that each risk might have on your business can help support the severity of the risk.
- Risk mitigation. Also known as a risk response plan, a risk mitigation plan should include a step-by-step solution intended to reduce or eliminate the risk, a brief description of the anticipated outcome, and how the risk mitigation plan will affect the impact of the risk.
- Risk priority. Establish the priority of the risk, typically by combining the probability of the risk and the risk analysis. One way to do this is to document priority using a simple numerical scale, such as 1 (low), 2 (medium), or 3 (high).
- Risk owner. Each risk to an organization should have an owner assigned to it, to assure that the risk is mitigated according to plan. Risk ownership should include the person who is assigned to oversee the risk mitigation plan, plus any additional team members as necessary.
- Risk Status. The status of each risk can let people know whether a risk has been successfully mitigated or not. A risk status can be marked as “open,” “in progress,” or “closed,” for example.
While your risk register should include an owner for each risk you identify, the risk register is itself typically owned by project managers or project stakeholders, to assure that all of your risk information is stored in a single accessible place. Some companies may choose to work with experienced risk management professionals to manage their risk register for them, although many give the task to an internal project manager.
The Relation Between Risk Registers and Risk Management
An organization’s risk register is a document that will guide the entire risk management program and the organization’s overall compliance efforts. Whether or not an organization must keep a risk register will depend on the industry and the relevant regulatory requirements.
The project management frameworks also require an organization to define a risk management plan for the project. Using a risk register is one way to do that, and it can also demonstrate to auditors that you have a plan in place to address each risk that might come along.
In other words, a risk register serves as a blueprint for your risk management program. It assigns roles and responsibilities, as well as specific action items. It captures the state of risk for your business (or a specific project therein) so that everyone knows how to manage risk more efficiently.
Benefits of a Risk Register
Using a risk register brings many benefits; one of the biggest is that it will enable teams to manage the organization’s risks more strategically. A risk register can help your business also focus on the organization’s resources in the areas with the highest risk. It can help decision-makers to justify more resources in security measures that will help prevent future risks from harming the business operations and assets.
Additional benefits include:
1. Supports identifying risk patterns
Keeping up-to-date information in the risk register for each new project will let organizations identify risk patterns and be more prepared to tackle new risks that may arise in the future. Put another way, the register will help team leaders predict the risks that could harm business in the future.
2. Provides a common scale for risk measurement
To create a successful risk register, you’ll need input from experts in all areas of your organization. This means that all relevant parties will need to agree on a common scale for measuring risks.
You could decide to measure risk using a qualitative or quantitative scale; that will depend on what makes the most sense for your business. Implementing a uniform measurement scale across your organization, however, will result in more relevant and understandable information across different areas. This will also give stakeholders more tangible data to prioritize risk response activities.
3. Provides more confidence in decision making
Relying on the data generated by a risk register will give your company leaders and stakeholders more confidence in their decisions. A risk register will allow you to plan for risk responses that are informed by the context of the risk itself. Comparing detailed risk information with enterprise objectives and budgetary guidance will help your company to make better decisions about where to spend, and why.
A risk register requires project managers to assign a risk owner for each risk. It also requires risk owners to verify whether the risks are being mitigated according to plan. This will require team members to check whether certain policies are up-to-date and whether existing controls are functioning as designed.
Maintaining an up-to-date risk register also enables businesses to produce enterprise-level disclosures for compliance audits, formal reports, or regulatory filings. That, in turn, helps businesses to meet regulatory needs in the event of a compromise to the organization’s risk posture.
A Step-By-Step Guide to Building a Risk Register
To start building your risk register, consider one of the many templates available online. Whatever structure you decide to use, the objective of your risk register will always be the same: to log information about potential risks. Beware getting caught up in the details! Only choose the fields you feel are necessary to communicate the most information about potential risks to your business or project.
Here are the basic steps to create a risk register:
1. Identify risks to the organization
The methods used to identify risks can vary, but usually one starts with a risk assessment or a risk analysis.
Consult with other managers across the enterprise to hear what they believe the major risks are; perhaps have a brainstorming session to generate material. Leverage everyone’s expertise to identify potential risks in various areas of your organization.
2. Define the risks the enterprise faces
After identifying the potential risks to the business, provide a brief description for each one. A risk description can be limited to only the essentials, but still include enough information for all team members to understand why the risk is included.
This step helps managers to understand how individual risks should be grouped into larger categories. Describing the risk also allows for better decisions on how it should be assigned risk owners. For example, this step will inform the “Risk Description” and “Risk Categorization” fields in your risk register.
3. Estimate the probability and impact of organizational risks
It’s important to estimate how each risk might affect your business so you can develop a strategy to deal with them. Deciding the likelihood of a risk is a difficult process, and how you execute this step will largely depend on the risk management methodologies your organization uses. Whichever method you choose, this step will inform the “Risk Probability” and “Risk Analysis” fields in the risk register.
4. Create a risk response plan
A response plan for each risk identified, described, and analyzed assures that the risk is managed effectively. This step can require a great deal of effort and time from the project team. In the end, the risk response plan should be clear and concise.
It is important to research and perform due diligence on all possible risks. If a risk does occur, the risk owner should be able to go straight into action and follow the risk response plan accordingly. This step will inform the “Risk Mitigation” field in the enterprise risk registry.
5. Prioritize risks based on impact to the organization
Not all risks and threats pose the same amount of risk; this step is meant to help organizations better evaluate the level of risk compared to others. Risks with the highest likelihood and potential for impact in many areas should be given the highest priority for mitigation and action plan.
Each risk priority can be determined by combining the risk probability and risk analysis measurements from the steps above.
6. Assign risk owners for each project
Assign a specific owner to each risk identified. Confirm that the people chosen can mitigate the risk, and that they know the mitigation plan for that risk. This step will inform the “Risk Owner” field in your risk registry.
Creating a risk register using these steps will help you build the foundation for a successful risk management plan. Identifying and establishing a mitigating action to new risks can be challenging, but it’s essential. Perfecting your risk registry to the best of your ability can help minimize and remedy risks to your organization.
Minimize Risks with the RiskOptics ROAR Platform
One of the most efficient ways to make risk identification and mitigation easier for your business is to employ tools designed to help. The RiskOptics ROAR Platform is an integrated cybersecurity risk management solution designed to provide actionable insights to gain the visibility you need to stay ahead of threats and communicate the impact of risk on high-priority business initiatives. Turn the unknown into quantifiable and actionable risk insights with built-in expertise that identifies and maps risks, threats, and controls for you, so you can spend less time setting up the application and more time using it.
RiskOptics ROAR offers a single, real-time view of risk and business context allows you to communicate to the board and key stakeholders in a way framed around their priorities, keeping your risk posture in sync with the direction your business is moving.
RiskOptics ROAR will even notify you automatically of any changes or required actions so that you can be on top of your risk posture like never before. Eliminate time-consuming, manual work and streamline collaboration by automating workflows and integrating with your most critical systems.
Plus, RiskOptics ROAR is seamlessly integrated to ensure you can leverage your compliance activities to improve your risk posture. The RiskOptics product suite allows you to see, understand, and take action on your IT and cyber risks.
Schedule a consultation today to learn more about how the RiskOptics product suite can help your organization mitigate cybersecurity risk and stay ahead of threats.