01 Oct 2013

Risk Management Best Practice 5 – Ongoing Risk Monitoring

Organizational Performance Measures, Premium, Risk Management No Comments

StrategyDriven Risk Management Best Practice ArticleEvery organization is challenged by risks manifest through its many different day-to-day operations. To help monitor and manage these risks, most organizations employ groups providing performance and compliance risk assurance so that significantly adverse consequences are avoided. These groups typically carry out their function through the conduct of periodic, in-depth assessments of those areas representing the highest risk to the company. Such assessments are both costly and time consuming; their accuracy rapidly diminishing with the passage of time since the assessment’s performance.

How then can an organization economically monitor performance and compliance risk on a more continuous basis in such a way as to enable a timely, preemptive response should an elevated risk condition be detected?

Well-conceived risk management dashboards aid oversight organizations including internal audit, management oversight, and compliance groups, in monitoring the organization’s overall risk profile and risk-based operational performance. Such dashboards focus on the organization’s key risk processes and include drill-down measures monitoring for diminished risk margins. (See StrategyDriven article, Organizational Performance Measures Best Practice – Vertical Cascading) The system contains both organizational and oversight action thresholds prompting action to ensure continued, effective risk mitigation. (See StrategyDriven articles, Organizational Performance Measures Best Practices – Predefined Action Thresholds and Multiple Action Thresholds) Furthermore, the risk management dashboards should inform the development of annual oversight assessment plans as well as where oversight resources should be applied for preemptive assessments based on situational and conditional performance. (See the StrategyDriven Self Assessment Program Forum)

Construction and Use of Risk-based Performance Metrics Dashboards

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About the Author

Nathan Ives, StrategyDriven Principal is a StrategyDriven Principal and Host of the StrategyDriven Podcast. For over twenty years, he has served as trusted advisor to executives and managers at dozens of Fortune 500 and smaller companies in the areas of management effectiveness, organizational development, and process improvement. To read Nathan's complete biography, click here.

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