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WolfPAC > Resources > Manual Vs. Automated Risk Assessments: Which One is Right for You?

Manual Vs. Automated Risk Assessments: Which One is Right for You?

A well-executed enterprise risk assessment is like an armored vehicle. It helps keep your organization safe and propels it forward.

A solid risk assessment helps you identify, understand, and mitigate threats. It also aligns with your institution’s business objectives. As a result, your risk team must be able to:

Quickly analyze results, and
Report findings to your executive group.

The system you use to manage your risk assessments will play a massive role in achieving these goals. Will it be modern and automated, or old-school and manual?

Manual Risk Assessments:

Risk Assessments: Manual Vs. Automated

Most manual risk assessments use a series of spreadsheets to accomplish their goals. The risk manager typically quarterbacks the program and is responsible for managing risk activities and analyzing data.

There are two main reasons to use a manual risk assessment: Money and control.

Money: You likely already have Excel on your computer, so starting your program is zero hard cost.
Control: You know best how you want it managed, so why wouldn’t you be the one to set it up exactly as you want? Having a spreadsheet means you can customize and color code how you want.

A warning about manual risk assessments:

In exchange for the low startup cost and free reign over your program, you pay in time and the potential impact of poor data integrity. When taking the manual approach, processes and people are often siloed. This dynamic makes coordination and collaboration inefficient. One of the most dangerous aspects of a manual risk management program is the lack of integration. When a change occurs to a vendor, you will, at the very least, need to update your:

IT assessments,
Business continuity assessments, and
Vendor assessments.

Human Error & Data Accuracy Issues:

Manual systems introduce the possibility of user error, which can damage your institution’s bottom line and reputation.

Oops! You accidentally missed one vendor update. Now, you have incomplete data that could produce critical gaps in your program.
Oops (again!) You missed a critical change in your assessments because of a missed compliance update. Now, your organization might face criticism from regulators and internal auditors.

Staffing Issues:

If hands-on training and mentorship are the extent of your program, you may need some help. If not now, later. Many organizations get along OK until the person who created their risk assessment spreadsheets leaves. What then? Hiring and training new employees to conduct risk assessments and create relevant reports is a resource-intensive process. Things get even more problematic when no one is left to teach newcomers.

Data Accuracy:

Another concern is the uniformity of assessment results. Having each department rate its risks without a standardized set of questions is a recipe for failure. This strategy leads to subjective answers that can significantly alter the accuracy and integrity of any resulting analysis.

Poor Visibility & Reporting:

Manual risk assessments make data analysis difficult. Their scattered, siloed approach makes gaining a holistic view of risk across your organization nearly impossible . Even worse, condensing the raw data into actionable insights could take hours. Then, you need to organize the outcomes into something your executive team, board, auditors, and examiners can digest. Does that sound like fun?

Trend Analysis:

Identifying previously low risks that are now moderate or previously moderate risks that are now high helps to highlight emerging risks you can use to predict the future of your risk management plan. With manual programs, updates typically override historical data, making historical trend analysis difficult.

Automated Risk Assessments:

Automated tools compile and repost risk assessment results from many different risk areas. The risk manager typically manages the system, which administrators across the organization leverage to perform the assessments.

Benefits of Automated Risk Assessments:

There are many benefits to using an automated risk assessment. Most of them involve saving time and increasing efficiency. Let’s take a look at some of them in more detail.

Integration: Automated tools integrate with your individual risk assessments to pull in results automatically. When you update an assessment, the information immediately flows into every relevant area across the system, which is a major time-saver.

Regulatory Updates: Compliance standards are built directly into ERA software, eliminating any worries about addressing the appropriate regulations within your program. Automated ERAs are updated regularly to keep current as regulatory changes occur, so you don’t have to spend hours researching what the changes are and when they go into effect. This functionality leaves you free to focus on the impact on your organization and how to comply with expectations.

Data Accuracy: Automated tools have uniform questionnaires for each risk assessment. As a result, you can be confident that each person working through the assessments is giving consistent feedback that you can use to make better business decisions.

Data Analysis & Reporting: Automated ERA solutions also simplify data analysis. Dashboards give you a quick, high-level gauge of your risk results and any remediation you need to address immediately.

Built-in report templates and customization options give you enterprise-wide results. This functionality helps you tell your risk management story to your board and examiners.
Historical data also allows you to view how control changes impact your residual risk across each risk area.

Equipped with this data, you can see potential risks before they become an issue for your organization.

The Downside:

The biggest cons associated with automated risk assessments are cost and control. Automated software will always cost more than an Excel spreadsheet. However, the value-added features and functionality far outweigh this benefit. Report writing capabilities, automation, and integration are powerful tools that help drive efficiency. Be sure to consider this when determining whether the system is worth the cost.

Conclusion:

Determining whether to complete your risk assessment with a spreadsheet or an automated software solution will have a significant impact on you and your team.

Do you want to find the best fit for your organization? Start by determining:

The functionality you need;
How much time you want to dedicate to the process;
The goals of your risk management program; and
Your risk management budget.

Risk management is far too complex and important to be siloed and live in a tool with low transparency that is ill-suited to collaboration. The truth is that critical team members are likely to leave, and spreadsheets will fail you at some point. So, don’t wait for the inevitable to happen before you centralize, formalize, and automate your risk management program! Connect with WolfPAC today to get started.