Risk Management
"It's not what happens to you, but how you react to it that matters."
Epictetus
Whether your company is a fledgling start-up or an established leader in its field, it will be facing risks that may jeopardise your success. It is therefore important to ensure these risks are identified and actively managed. The risk management system included within Kdensity allows you to assign risks to all but the top level of your business model (departments/functions/processes) along with your asset types (into inputs and outputs to your processes). As with other risk management systems, each risk is initially allocated an inherent probability and impact that is used to calculate a RAG (Red / Amber / Green) status. Risks can also be assigned a risk category which allows a heatmap style summary of the risk exposure for the operating model.
Kdensity recognizes that operational risk control is only effective when the risks identified are actively managed. When a risk is identified, it can be assigned one or more controls to define how it will be managed. A standard TAME (Transfer / Accept / Mitigate / Eliminate) approach is used to define the control’s response to a risk. In addition to this, the extent to which a control mitigates the probability and/or impact of a risk can also be specified. Consequently, risks in Kdensity have two statuses; the inherent risk before mitigation and a residual risk once controls are applied.
The active management of risks using Kdensity is enhanced further by the use of actions.. These allow you to capture additional information relating to controls as follows:
- Work actions - work required to ensure risk mitigations are in place.
- Approval actions - periodic management confirmation that a control is accurate and effective.
- Event actions or incidents - a record of the physical manifestations of the controlled risk and the resulting response.
If you are still managing your risks on spreadsheets, Kdensity will take your risk management to another level.
Kdensity Risk Management
There are a number of systems on the market for business risk management. Many of these are extensively configurable and thus complex to use. The risk analysis software available within Kdensity requires no setup. All you need to do is define your risk classifications, and this is optional and can be done later when you have a better feel for how best to classify your risks.
If paying more for your operational risk control provides you with extra comfort, perhaps that is what you should do. However, we would implore you not to let the complexity of your risk control software you use to be a risk to your organisation.