An organization’s risk monitoring activities can mitigate risk and streamline risk management. Address risks identified in assessments with monitoring practices designed to ensure compliance, safer assets, and the availability of the right resources to reduce the potential impact of any threats.

Recent Science Direct research found that risk monitoring could evaluate the ongoing effectiveness of controls, identify new risks, and ensure risk management strategies are implemented as planned to help organizations meet their objectives. Implement risk monitoring to protect companies and personnel.

Let’s define risk monitoring, show you how it could benefit organizations, and give you a detailed guide to implementing risk monitoring tasks, strategies, and reporting to achieve your objectives.

What Is Risk Monitoring?

Risk monitoring has structured processes enterprise owners and managers implement to identify new threats with key risk indicators and document risk factors with their associated impact in an ongoing risk management lifecycle. An enterprise risk management program (ERM) survives by monitoring risks.

The need for organizations to monitor risk is a process with an ongoing basis to adapt procedures, identify new threats, and manage the impact on operations, personnel, and companies. It’s vital to the effectiveness of a risk management program in any organization to constantly adapt strategies.

Many companies use third-party risk management for risk assessments, management, and monitoring. However, an in-house team can lead all risk-monitoring activities with the right knowledge and health and safety inspection software. Monitoring risks is ultimately being proactive and prepared.

Risk monitoring focuses on four primary purposes to obtain the intended results and address concerns:

1. To determine how the risk is changing.
2. To establish how those changes impact risk management.
3. To assess whether an organization took enough risk to achieve its objectives.
4. To inform how companies are responding to risks in a new mitigation strategy.

4 Different Types of Risk Monitoring Activities

Companies typically adopt a holistic view by using multiple types of risk monitoring practices and activities throughout the risk assessment and management processes. The execution of each can create improved internal policies, detail the need for insurance, or reduce fraud, theft, or other risks.

• Risk Identification – A risk manager will assess existing monitoring processes to identify new risks in the environment, financial reports, or employee measures.
• Risk Analysis – Risk managers will perform a risk analysis to analyze whether the monitoring controls remain effective or require updates.
• Risk Treatment or Control Measures – Risk managers will implement leading risk mitigation methods, control measures, and day-to-day policies.
• Risk Reports and Communication – The risk manager will report risks, new and existing, on a frequent basis to communicate risk profile changes.

Risk Monitoring Examples

Risk monitoring typically revolves around a profile based on the company type or recent industry events. Business models adapt to account for profile changes in a consistent approach for improvement and to make informed decisions about risk management and other tasks. Here are two examples:

Risk Monitoring Example: Financial Industry or Banks

Banks or any financial institute typically still have an assigned role called a chief risk officer (CRO). The CRO is responsible for monitoring information about fraud and anti-money laundering controls and fraud. The CRO is also responsible for how business units respond to trouble and treat common threats.

The bank will execute an urgent action plan that will focus on typical threat sources while reducing the probability of potential errors and internal human vulnerabilities. Additionally, bank executives, regulators, and the CRO focus on industry compliance by analyzing every new threat with regulatory guidance.

Risk Monitoring Example: Enterprise Operations

Most companies monitor risks on an ongoing basis, understanding how it’s an essential part of the risk management strategy. Many organizations use a range of risk monitoring practices in different departments to quantify any risk impact they may encounter.

Enterprises can also split business units and departments to assign the role of risk owner to each, ensuring that each risk manager is focused on the proposed management plan, can discuss and report any new incident, and has the ability to change the quality or risk management based on data.

Investors, Employees, and Enterprise Benefits of Risk Monitoring

Risk management is how businesses execute defense mechanisms against natural disasters, data breaches, failed technologies, human error, and accidents that may cause harm to an employee. However, the standardizing risk monitoring within an organization has the following benefits:

• Properly implemented monitoring will comply with the relevant regulations.
• Creating a monitoring strategy with detailed context ensures everyone can function as planned.
• Oversight from executives can ensure mitigated risks drive success based on a business model.
• Project managers can design a business strategy with developed technology to mitigate risks.
• Shared expectations and instructions allow the entire team to action risk monitoring activities.
• An internal event action plan prevents severe impacts from data and security breaches.
• The price of risk management will fall once a company develops proper monitoring processes.
• Managing risks to perform better in the market and improve operational efficiency is guaranteed.

Navigating health and safety compliance in the digital era doesn’t need to be rocket science. Monitoring risks in a step-by-step process can reduce many factors organizations determine are high-impact risks. Use a standardized approach to adapt to risk-changing factors.

The Importance of Risk Monitoring

The importance of risk monitoring in the risk management process includes how certain risks could cause significant financial loss, poor governance, and contribute to the loss of investors. Risk monitoring before, during, and after a risk assessment consolidates compliance and reputation for businesses.

One Science Direct article found that risk monitoring activities were an integral part of an effective risk management strategy cause risks constantly change. Assessing new risks is possible through constant risk monitoring activities and record keeping, both being cornerstones to mitigate and manage risk.

Meanwhile, an ERM Journey report found that businesses consider risk monitoring as one of their top five priorities in their company strategy. Additionally, the Office for Financial Research shows that JPMorgan Chase had 403 risk exposures in 2023 with Bank of America having 329.

All businesses require protection, and the best technique to ensure continued protection is risk monitoring. Here are some key benefits of monitoring risks in risk management:

• Mitigate or minimize risk by identifying threats and the responses necessary.
• Mitigate the impact of various types of risks with well-defined action plans.
• Understanding the risk landscape to change from reactive to proactive in risk management.
• Assume accountability by recording results in reports and taking urgent action to mitigate risk.
• Show transparency by taking responsibility for mistakes and earning the trust of stakeholders.
• Shift the mission to learn from the past mistaken ventures to attain risk management improvement.
• Leverage growth, enhanced performance, and seamless productivity in all processes.

How Does Risk Monitoring Fit Into a Risk Management Process?

Monitoring risks can affect risk management strategies. For example, organizations face a range of risks related to systems, operational processes, financial investments, personnel safety, and manufacturing processes to mention a few. Monitored risks can change how an organization will manage specific risks.

Monitoring systems and strategies on an ad-hoc or continuous loop will affect whether processes run smoothly, productivity increases, and incident reports decline. Monitoring efforts also present opportunities to change the response to a system failure or deal with breaking components.

The monitoring process will determine every response, effort, and aspect of managing risks to ensure an organization’s strategy remains effective, placing an emphasis on actionable steps the entire team can use when a risk response is necessary to save systems from costly malfunctions or staff injuries.

How Much Risk Monitoring is Necessary in the Risk Management Process?

Risk monitoring is an ongoing process within the risk management programs designed once assessors use various methods while conducting a risk assessment to recognize risks in a system, project, processes, or services. How often businesses reassess risks depends on costs and industry.

An organization will follow local regulations defined by industry standards. For example, banks would utilize monitored risks continually as a high-risk industry. However, an IT organization will do regular monitoring, while low-risk firms would complete ad-hoc monitoring sessions for a system, or operation.

Do All Risks Require the Same Level of Risk Monitoring?

No, risk management standards outline how a risk assessment measures risk factors based on impact gravity. An organization won’t manage risk the same way if the risk score is low during an evaluation. Additionally, organizations won’t use continuously monitored risks if the likelihood remains low.

No two risks are the same. How each risk will affect organzations will determine the response and how entities will act once it occurs. Hence, investigate the impact of risks with a detailed definition before outlining an applicable monitoring program scope or date to reassess control measures for mitigating risks.

Who Is Responsible for Monitoring Risks?

Anyone can be responsible for risk assessments, risk management, or monitoring activities. An organization can assign the responsibilities of identifying risks and tracking changes to risk managers. The risk owner will have the responsibility of continuous assessments, monitoring, and management. Some companies seek external practitioners if no internal person can handle the responsibility.

The Risk Management, Documentation, and Monitoring Cycle

Businesses can skip to step three if they already conducted recent risk assessments and completed a risk registry. Alternatively, start at step one to understand and execute the management process before documenting reports in step two and implementing the actual monitoring process in step three.

Step 1 – Begin the Risk Management Process

An efficient risk monitoring process follows the International Organization for Standardization (ISO 31000) risk management framework, which includes a 5-step process with quick risk assessments to understand the nature of risk management and other activities.

The risk monitoring process follows a standardized risk assessment that provides access to the initial data the risk manager can access, monitor, manage, and adjust. Use the 5-step process before monitoring risks if your business hasn’t conducted a recent risk assessment:

1. Identify risks in the environment, equipment, operations, procedures, and processes.
2. Analyze the likelihood and potential impact of identified risks, even based on recent events.
3. Evaluate and prioritize the risks should any event happen based on business goals.
4. Respond to, eliminate, mitigate, or treat the risks based on risk level and impact severity.
5. Review and monitor the risk control measures frequently and inform data-driven adjustments.

Alternatively, use the COSO integrated framework for enterprise risk management when identifying risks or developing a strategy. Determine which framework better suits your organization or industry.

Step 2 – Utilize Risk Documentation

The National Institute of Standards and Technology (NIST) outlines the NIST-IR 8286A guidance for information technology reporting and documentation, which aims to guide the reporting of management and monitoring records in a risk register. The register will be a valuable asset for future monitoring. A risk assessment, management, and monitoring app like Velappity provides all the right tools.

Step 3 – Conduct a Continuous Risk Monitoring Process

Finally, start the monitoring process on a regular basis to ensure specific risks haven’t changed, control measures remain effective, and the management strategy can continue identifying new hazards to an organization.

Monitor Risk Responses

Evaluate the response plan for each risk that is assigned to a risk owner within an organization. Monitor how risk managers react to incidents and update the management strategy or scope with new information. It also helps to create contingency plans in the case of an occurred incident.

Identify Trigger Conditions

Risk and project managers must remain attentive to incident risk triggers, indicating that a specific issue has gained a higher impact on the company programs, finances, identity, or anyone involved with any processes on the premises. Develop a list of trigger conditions to become more aware of risk changes.

Reassess for New Risks

Managing risks in large and ever-changing organizations requires continuous re-assessment to identify potential risks that weren’t in the original strategy. Reassess for new risks if any significant changes occur in the environment, including the introduction of new equipment, programs, or staff.

Assess the Effectiveness of Existing Controls

Periodically review existing controls to identify leads that some measures may not be as effective as planned. Schedule regular reviews and collaborate with multiple departments to decide whether the current responses are effective or not. Start a risk assessment if ineffective responses are identified.

Effective Risk Monitoring Strategies, Tools, and Techniques

Dealing with security, data, operational, or health and safety risks requires the implementation of efficient risk monitoring strategies, tools, techniques, and methods, including the following:

• Risk Auditing – A risk audit will examine a risk response and elements to identify update needs.
• Risk Assessment and Reassessment – A complete reassessment for well-defined strategies.
• Risk Transfer – This technique will transfer the risk to another department or external stakeholder.
• Risk Responses – Defined processes that trigger once the risk threshold or limit is breached.
• Trend Analysis – Evaluate risk trends to examine the variances between expectations and findings.

The Importance of Monitoring the Different Types of Risks

There’s an exhaustive list of risk types that different departments, companies, and industries face. However, here are the four of the various types of risks and quick risk monitoring tips for each:

• Compliance Risk Monitoring – Compliance issues lead to heavy fines, reputation damage, and revenue losses. Compliance requirements and local regulations update with a surprising frequency. Constantly monitor, review, and adjust the company strategy accordingly.
• Health and Safety Risk Monitoring – Health and safety risk monitoring is essential to ensure personnel safety, reduced injuries, and the elimination of the likelihood of death. Have insurance in place with responses to mitigate safety risks in the workplace, monitoring the status continuously.
• Information Security Risk Monitoring – Information security risk monitoring refers to how companies monitor risk related to sensitive data. Data breaches and cyber-attacks could occur at any time, putting information provided by customers at risk without continuous monitoring.
• Operational Risk Monitoring – Operational risks can halt operations, including natural disasters, and financial or technical issues. Assess and monitor these risks while planning a contingency strategy with procedures to follow during the events, constantly monitoring effectiveness.

The Common Challenges of Risk Monitoring

Organizations face some challenges with monitored risks or developed management plans, including:

• Poor Governance – Errors and miscalculating risk factors are possibilities. An organization must action effective risk governance to prevent failure.
• Overconfidence – Any risk can change, and the resources needed to ensure organizations thrive must adapt. Review and monitor regularly.
• Limited Processes – An organization that hasn’t conducted a risk assessment for a year must start at step one, identifying, evaluating, and mitigating risks before monitoring them.
• Control Illusions – An inadequate monitoring frequency or procedure can result in organizations having a false sense of control over resources and mitigation strategies.

Minimize Risks With Efficient Risk Monitoring Tools

Accept nothing but perfection. The greatest enterprises worldwide have accepted nothing less. The Velappity app is an all-in-one software platform designed to simplify assessments, management, reporting, and monitoring while meeting compliance and regulatory standards.

Leaders worldwide have referred new clients to our app as it performed better than expected. The Velappity pricing options also cut the costs of external risk practitioners by helping a risk owner within your business handle every step of each of the processes, including inspections and report sharing.

Nonetheless, Velappity has presented multiple businesses with customizable forms for inspections and an easy-to-use client portal with a mobile-first approach. Start a free trial today, or contact us to talk about your specific business needs and monitoring requirements.

Risk Monitoring Conclusion

Enhance your company’s tolerance to risk by adopting effectiveness in every assessment, management, and monitoring stage. Aim to implement a robust measuring, managing, and monitoring system to shed some light on a weak point that could lead to unexpected business charges.

Engage an interested and involved committee for a consensus on what to expect and the basic features of a monitoring program. Leverage a risk-free company culture, unlike any competitor. Gain the ability to protect your business against nature, people, fraud, and cyber-attacks when you contact us today.

Risk Monitoring FAQs

What are the common sources of risks?

The common sources of risk vary depending on the industry. However, some risks are shared among industries, including financial, strategic, operational, reputational, compliance, physical, technology, legal, competition, security, health, safety, market, cost, credit, and environmental risks.

What is the goal of risk monitoring?

The point of monitoring risks is to determine risk changes, exhibit how the changes impact management activities, assess whether the company took enough risk based on its objectives, and inform and develop a new mitigation strategy.

What are the advantages of risk monitoring?

Some more advantages of monitoring practices include the following:

• Improved business tolerance for risks
• Assessing new potential risks makes businesses resilient
• Having a team culture for monitoring allows faster response actions
• Transform the future of your business into a positive outlook
• Support all processes with compliance efforts to ensure regulations are met