Target risk assessment in Advanced Risk
Summarize
Summary of Target Risk Assessment in Advanced Risk Governance, Risk, and Compliance
The target risk assessment within the Advanced Risk application is designed to help organizations define and achieve their desired future risk levels. It allows for the evaluation of the likelihood and impact of identified risks, establishing target risk levels that reflect the optimal risk posture post-risk response implementation. This assessment aids in measuring the benefits against the costs of actions taken to mitigate risks.
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Key Features
- Configuration: A risk administrator can set up the target risk assessment within the Risk Assessment Methodology (RAM) form, enabling the assessment for published RAMs, which cannot be turned off once activated.
- Assessment Process: Assessors utilize defined factors, scoring logic, and criteria in the RAM form to analyze future risk states. The system computes the future risk appetite status to ensure alignment with the target risk profile.
- Approval Workflow: Risk approvers review and approve the target risk ratings and future appetite statuses.
- Reporting: The heatmap feature provides a visual representation of the inherent, residual, and target risk states, allowing for analysis of risk movement over time.
Key Outcomes
By utilizing target risk assessments, organizations can effectively monitor progress toward their desired risk levels, ensuring that risk management strategies align with their overall risk appetite. This structured approach enhances decision-making and promotes accountability in risk governance.
You can perform a target risk assessment to define your desired future risk level using the Advanced Risk application. The target risk assessment enables you to assess your target risk posture and monitor progress toward its achievement.
Overview of a target risk assessment
A target risk assessment is an assessment type to define the desired risk level the organization want to achieve in the future. By evaluating the desired level of likelihood and impact of identified risks, organizations can establish target risk levels for each risk.
For example, when assessing a risk, organizations consider various aspects such as inherent risk, the effectiveness of controls, and residual risks. However, it's equally important to capture the desired risk level that will be attained after the risk response is implemented. The target risk represents the optimum level of risk that you aim to achieve after your action plan is successfully executed. It enables you to measure the benefits your organization gets in relation to the cost of implementing those actions.
Setting up a target assessment
A risk administrator can configure and set up a target risk assessment for your organization in the Advanced Risk application. Risk administrator can enable the option for assessing a target risk on the Risk assessment methodology (RAM) form. For more information, see Configure a target assessment.
Assessing a target risk
Assessors can analyze the future state of the risk based on the defined factors, scoring logic, and rating criteria in the RAM form. Assessing the future state of risk is a structured process that shares similarities with inherent, control, and residual assessment types. Based on the target risk profile, the system also computes the future risk appetite status. It enables assessors to analyze if the target risk profile is in line with the risk appetite or not. Risk approvers can review the target risk rating and the future appetite status and approve them. Target risk assessment can be performed for both risk and object-based assessments. However, if it’s object-based, the future appetite status isn’t computed and displayed. For more information, see Perform advanced risk assessment in the Risk Workspace.
Reporting a target risk
On the heatmap, you can view the target risk profile, which provides a comprehensive understanding of the inherent, residual, and target states of the risk. When the risk assessment criteria are shared, you can analyze the risk movement from inherent state to residual state and then to its target state. By using the risk trend capability, you can assess risk changes over the past five periods to determine if it’s moving in the desired direction. For more information, see Risk heatmap workbench.