Every business involves risks. But it’s up to key stakeholders and decision-makers to evaluate whether any particular risk is worth the benefits it brings to the company.
All risks should be thoroughly evaluated, categorized based on a risk assessment matrix, to determine what areas need more security. It’s equally important to continually conduct risk monitoring practices as part of a company's risk management process.
What Is Risk Monitoring?
Risk monitoring is continuously evaluating potential risks to a business, its operations, and its staff.
As risks are being monitored, key stakeholders can make informed decisions to manage these risks more effectively and efficiently.
Risks should be monitored continuously and consistently to establish how they impact a business, its business practices, and its employees. With continuous monitoring of risks, an organization can adjust its processes, procedures, and strategies accordingly to avoid or mitigate potential damage or losses.
Why Is Risk Monitoring Important?
Risks are not static. Instead, they are dynamic and could change over time. Something that is a relatively small or insignificant risk today might be a significant risk tomorrow.
While monitoring risk, it should be observed how risk changes and how those changes could affect a business. More than that, it should be evaluated whether the risk of a particular collaboration is still worth the benefits gained from it.
Certain endeavors may need to be halted because the risk has become too high. In other instances, a company could afford to assume greater risks to gain more benefits.
How Do You Monitor Risk?
An effective risk monitoring plan should be followed to avoid anything potentially falling through the cracks. This plan provides guidelines regarding each risk. It stipulates how often any particular risk needs to be reviewed, what to monitor, and how changes need to be reported. It also takes into account that risk strategies may need to be changed and stipulates how those changes might be implemented and by who.
As you monitor a risk, you need to consider whether the nature of the risk has changed. It would be best if you also looked out for any risk triggers. Risk triggers are signs or signals that risk has caused an incident to occur or are close to having an incident occur. By identifying a risk trigger, you could respond faster and limit the amount of damage or loss.
During the risk monitoring process, any changes in risk should be reported thoroughly. This report can then be used to make informed decisions about whether it is still viable to continue carrying the specific risk. It also allows key stakeholders to rework risk strategies.
Two Types of Risk Monitoring
Voluntary risk monitoring relates to risk monitoring processes implemented by a business to evaluate risks posed to its operations and workforce.
Laws or regulations in specific industries stipulate mandatory risk monitoring. This type of risk monitoring is required for a company to adhere to regulatory compliance required in the sector in which it functions.
How Is Risk Monitoring Different from Cybersecurity Analytics?
Risk monitoring refers to all different types of risks that could affect a company. This could include operational risks, credit risks, supply chain risks, financial risks, compliance risks, information technology risks, project risks, and regulatory risks, among others.
Cybersecurity analytics, on the other hand, involves identifying, monitoring, and protecting an organization's digital space from cyber attacks.
Therefore, cybersecurity analytics involves a type of risk monitoring. In this case, the risk monitoring is limited to the digital space only to keep an eye on any cyber attack.
Does Monitoring Help Prevent Risks?
Monitoring risks does not necessarily prevent the risk. It could, however, assist in managing risks and potentially prevent an incident that might impact a company from occurring. Even after making every effort to account for and manage or mitigate any risk that you can think of, there will still be residual risks that might threaten your company.
A robust risk management strategy and response plan should be in place to manage any threats that occur based on a company's vulnerability due to the risks it has taken on.
By monitoring a risk, any change in it that could affect the company could be identified and managed quicker through a robust risk mitigation strategy.
It is likely that any particular risk will always be there. Monitoring a company's risks allows key role players to mitigate any potential damage or loss that could occur due to a specific risk.
It also allows companies to put processes and procedures in place that need to be followed in the event that an incident occurs.
Does Risk Need to Be Constantly Monitored?
Risks are evaluated when a new business strategy, process, or relationship is introduced. Typically, a company will investigate and establish whether the benefits of the new situation outweigh any potential risks that implementing it will bring.
As long as the benefits to the company outweigh the risks of a particular situation, it makes sense for a company to pursue that venture. If, however, there is a change in the level of risk that any particular situation poses, key stakeholders need to evaluate whether changes need to be made to the strategy, process, or business relationship.
Some risks only need to be monitored yearly or biannually. However, most risks require more frequent monitoring. In these cases, they might be monitored monthly, weekly, or even ad hoc.
More regular monitoring of risks allows you to quickly pick up changes to the risk status. This, in turn, enables you to implement risk mitigation or management strategies sooner, limiting the amount of potential damage or loss that could occur.
How Can RiskRecon Help Me?
RiskRecon, a Mastercard company, can assist with streamlining your third-party risk management program to better monitor your company's cyber risks. Try our 30 Day Trial today.
Risk monitoring continuously evaluates whether a particular risk is still worth the benefits it brings to a company. By monitoring risk factors, potential incidents can be mitigated and managed sooner, minimizing the impact on the company.
While some risks could be monitored less frequently, others need near-constant monitoring. We can help your company conduct risk management activities effectively and efficiently.