Best Practice Risk Assessment Template For Excel:
Our easy to use free risk assessment template will allow you to complete risk assessments
in excel for your organization and help direct your business strategy.
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Risk assessments have historically been plagued by subjectivity which means they simply cannot be relied upon to meet their objective. Subjectivity prevents the assessments from being used across business silos and makes verification by audit or compliance review impossible.
Common standards and assumptions makes information collected across the organization objective, quantifiable and comparable, enabling better analysis, issue resolution and issue escalation when necessary.
Download our free risk assessment template framework with best practices to get started today.
Free Risk Assessment Template: Overview
Our basic risk assessment template is designed to help you take the first steps in standardizing your processes. It will help you determine what data you need to collect from your business areas, define key terms, and outline suggested answer selections.
It also automatically generates risk heat maps based on your data, and includes step-by-step instructions for use.
By using our free risk assessment template you will be well placed to better manage risks in your organization.
Why Assess Risks
Risk assessments are a key component of any successful risk management program. No matter how basic or complex the framework, standardized assessment results serve as the foundation on which the rest of your risk management responsibilities, mitigation activities, and monitoring controls are built.
How Our Risk Assessment Template Can Benefit You
Successful enterprise risk assessments can be a powerful tool for senior-level strategic decision making by connecting business activities to goals, and identifying the risks that threaten to derail these strategic objectives. When risk assessments are carried out on the same standards and assumptions, they can be compared and utilized cross-functionally for more accurate and actionable risk management.
Completing a Risk Assessment: Step by Step
Below we highlight step by step what is needed to complete a risk assessment on both the free download of our risk assessment template and further within the LogicManager risk management solution.
Uniform numerical scale – LogicManager’s scoring is based on a scale from 1 to 10, with 10 having the most unfavorable consequences to the organization, and is split into 5 buckets to provide a high and low of each bucket. (1-2, 3-4, 5-6, etc). Using a 10 scale makes the math easy and having only 5 buckets gives folks doing assessments flexibility to select the high or low of the 5 buckets.
Objective evaluation criteria – Often, one person’s 9 is another person’s 7. LogicManager’s risk analysis template provides a clear definition on what each of the 5 buckets are in unambiguous terms. There are multiple ways of expressing severity, both qualitatively and quantitatively, such as financial, legal, strategic, etc. Any qualitative criterion can be given a score to become quantitative and comparable across the enterprise. All standards can be compared, including laws, regulations and corporate policies and procedures, with current practices.
Calibrated assessment criteria – A variety of risk assessment criteria is used within LogicManager and all are on a 1-10 scale and calibrated, meaning that the description of a 7, even if described differently in different assessment criteria has the same meaning of severity. This allows the aggregation of risk assessments to provide a holistic view of risk.
Universal business elements – Risk assessments in LogicManager are broken down into basic elements like business processes and resources, which are standardized across business silos, or business units. By resources, we mean people and vendors and the physical assets, risk assessment software applications, services and data repositories used in the organization. Assessing vendor characteristics separately from the products and services they sell will produce risk assessments that make it easy to identify and maintain objectivity as changes occur like mergers and acquisitions or new product introductions, etc. By breaking down complex interconnected information into resources as basic building blocks, LogicManager’s Risk Taxonomy Framework provides a structure for information and ownership. This enables everyone to understand, contribute, and accept responsibility for change management.
Link risk assessment templates – LogicManager’s Taxonomy technology links elements together, meaning by a simple drag-and-drop, you can connect vendors to the products and services they provide to the business processes that rely upon them. Link each financial element to the business processes that contribute to them. Link all of the internally developed applications and data repositories to the business processes that rely upon them to perform their responsibilities. Linking these elements together provides a holistic picture. For example, a vendor can have multiple products and services of different quality and risk. Assessing the products and services individually and linking those risk assessments to the vendor profile provides a much clearer picture on the combination of products services and vendors used by a processes owner.
Common resource library – LogicManager’s Taxonomy provides a common resource library. Using information from one common place makes it possible to dramatically reduce rework, especially collecting and managing information, for both you and the process owners you work with. The library also helps you know who else is connected to the same information. The key is to figure out how all of these resources are related to each other and what combination of these resources is most important to critical areas of your business.
Consolidate resource data collection – LogicManager’s risk assessment template for Excel allows you to create customizable data fields for each of these resource elements so you can gather information across silos and identify areas where controls and tests can be consolidated. Different areas across the organization are collecting the same information for resources, they just don’t know it. For example, accounts payable, contract management, vendor management, business continuity, and IT all collect overlapping information about your vendors. By understanding what information is being collected by these areas for each resource, you can easily rationalize and consolidate risk assessments and data fields.
Holistic, accurate ERM reports – You can analyze, report, and make decisions taking into consideration every relationship related to the resource. LogicManager’s business risk assessment template enables organizations to get an Overall Risk Score for each resource, which pulls subject matter expertise across the organization to come up with one aggregated number for that resource. All the complexity related to a resource, like a vendor, is simplified, but supported by a detailed trail of the objective risk assessments for all other things related to the resource, such as the business process, financial elements, physical assets, applications, data, and people.
Tasks & workflow – In LogicManager, for each resource element, you can send out emailed task notifications for scoring risk assessments or review, attach documents such as contracts, start approval workflows, collect customized data fields, see scores historically and much more.
When the relationships between the resources and the business processes that use them become explicit, organization can determine business impact. The stronger the understanding of business impact, the more effective the governance activity will be. The connection to a business process provides a direct connection to the subject matter expert for the activity that uses the resource and knows the criticality of that resource to their activity.
The result is a single overall summary score for each business process that combines the individual scores for each resources and financial item associated with that process and the process score itself. With this information, as laid out by our risk assessment report template, you can prioritize and focus your ERM efforts.
Using a Risk Assessment Template to Prioritize Business Measures
The number of business measures within organizations is typically growing. Measures are often added on a reaction basis to loss events that have already occurred. Wouldn’t it be valuable to be able to focus on forward-looking measures? In most organizations, these preventative, proactive measures are indistinguishable when grouped with reactive measures, because the metrics do not formally tie back to any commitments or risks.
What if a risk or activity changes? Organizations have no way of knowing how and if these changes will affect their risk metrics. Risk Assessments and linking risks to activities allows organizations to start prioritizing what activities need to be monitored. Through quarterly (or even annual) business risk assessments, organizations can detect increased threat levels and identify new emerging risks before they materialize and bring your risk metrics out of tolerance.
Business risk metrics are important because you cannot improve what you cannot measure. However, large numbers of unconnected goals is problematic because:
- Measurement fatigue – staff may simply ignore many measures because of a lack of time to assess them.
- Measure obsolescence – in a changing environment there is no effective way of knowing when measures no longer apply.
- Lack of prioritization – picking the measures to focus on is likely to be on an ad hoc basis and upon the whim of current staff.
- Lack of continuity – changes in the organization or the development of new lines of business may result in new measures while existing measures may be more effective.
- Lack of coordination – often measures apply to multiple risks or commitments across functional lines. The inability to formally tie measures to risk or commitments does not promote inter-functional coordination resulting in business silos and duplication of effort.
- Wasted resources – The amount of resource available to accomplish business goals and to mitigate risk is finite. Staff will often continue to manage to obsolete or unimportant measures rather than aligning with current imperatives.
- Resistance to change – A difficulty to apply past experience to a changing business environment resulting in a tendency to “reinvent the wheel.”
Much of the necessary information exists in organizations today; the missing piece is formalizing these critical connections. Enterprise Risk Management (ERM) software has functionality to identify risks and commitments; assess them based upon likelihood, impact and assurance; evaluate whether action is needed; devise mitigation or business building activities if needed, specify and record measurements to track effectiveness, and finally formalize the connection between all of these activities.
Connecting the measurements to the risk mitigation activities and business initiative data and then back to the underlying risk and commitments will provide the following benefits:
- ERM Reports: Explicit prioritization of measures based upon a risk/reward index and a dashboard presentation on the heat map dashboard in LogicManager.
- Operational Risk Management: Real-time trending of measures on an ongoing basis with measure consolidation used to direct management attention to problem (out of tolerance) conditions.
- Performance Management: Facilitate new business initiative business measurements prioritized upon risk or business commitments.
- Resource Allocation: More effective use of scarce resources.
The key is working with the functional managers to make the connections. The immediate benefit will be to identify measures that are not connected to any risk or initiative and to determine if they should be eliminated. Then, once the connections are made, use the management tools in your Enterprise Risk Management software on an ongoing basis to improve utilization of business measures within your organization.