Risk Assessment Matrices
With the plethora of risks that accompany running a business, it is much more practical to have everything organized in written form or, better yet, in the form of diagrams for a concrete, concise representation of which risks the company faces as well as the severity of them. Such diagrams are popularly structured in the form of risk matrices with the frequency or likelihood of the event scaled vertically and the impact of the event scaled horizontally, often with 5 levels on each axis with the overall risk increasing the closer to the extreme corner that the risk is placed.
One of the types of such matrices is a compliance risk assessment matrix. There are many laws, regulations, as well as company quality standards and promises that must be adhered to. The possibility of harmful or illegal substances being used in products or the manufacture of products, misuse of employee or client personal data could entail a catastrophic impact, such as the company becoming prohibited from continuing to manufacture the product. However, with proper attention to the entire process and product contents, the likelihood of that happening will be low, resulting in an insignificant risk according to the product risk assessment matrix.
Fraud Risk Assessment Matrix
There are many risks to account for in an office, since the most frequent cause of fraud occurs based on the intent or negligence of people working at the office. This makes a serious case for the need for a human resources risk assessment matrix. Often, the employee is partly at the cause of fraud due to being inept at operating the system. Indeed, with the rise of technology, software has become a major avenue for all sorts of potential harm reflected on a software risk assessment matrix. The best way to handle a high-risk network security risk assessment matrix, especially in a business running a server whose uninterrupted operation is vital, is to establish strict rules, procedure, and protective systems and ensure that employees are as well-versed in these practices as possible and that no unauthorized information leaves the office in addition to employees being unable to access elements that they have no right to access. Employee procurement fraud places relatively high on the fraud risk matrix – when an employee underreports company income or overstates or misrepresents its expenses. Employee fraud continues to be placed high on the fraud matrix due to the fact that as many as 50% of companies are affected by it on a yearly basis.
Internal Control Risk Assessment Matrix
Wise companies elect to acquire specialized software to micromanage such risks as well as to display an internal audit risk assessment matrix outlining the specific potential financial amount that could result and which of them must be attended to first. To many companies, their financial risk assessment matrix is the most significant; however, there are other, intangible factors as well, such as competition and legal factors. Despite this, financial risk matrices are invaluable tools in order to show the company whether a particular expense is going to be worthwhile and the losses it could potentially cause the company as well as the likelihood of that occurring.