# Compliance Risk Assessment Matrix: A Key Tool for Identifying and Prioritizing Risks

In today's fast-paced business environment, it is essential to identify and prioritize potential risks that could impact an organization's compliance with regulatory requirements. A compliance risk assessment matrix is a powerful tool that helps businesses proactively manage their compliance risk profile.

## Understanding the Compliance Risk Assessment Matrix

A compliance risk assessment matrix is a visual representation of the potential risks that could impact an organization's compliance with regulatory requirements. It involves identifying and evaluating risks, selecting criteria for evaluating and prioritizing risks, analyzing the identified risks, creating an action plan to mitigate those risks, and regularly updating the matrix.

## Identifying Hazards

### Step 1: Identify Potential Risks

The first step in creating a compliance risk assessment matrix is to identify all potential hazards that could impact an organization's compliance with regulatory requirements. This involves:

* Consulting with stakeholders
* Conducting a risk identification survey
* Noting down the driving force behind each identified risk

For example, if an organization regularly has access to multiple pieces of inside information, the Market Abuse Regulation (MAR) could be the driver behind much of the identified risk.

## Selecting Risk Criteria

### Step 2: Evaluate and Prioritize Risks

Once all potential hazards have been identified, the next step is to select criteria for evaluating and prioritizing those risks. The most common criteria used in a compliance risk assessment matrix are:

* Probability: the likelihood that a risk factor will happen to the business
* Severity: the likely impact that risk factor would have on the organization if it did occur

## Analyzing Risks

### Step 3: Calculate Risk Impact

Once the criteria for evaluating and prioritizing risks have been selected, the next step is to analyze each identified risk. This involves:

* Calculating the probability of each risk occurring
* Calculating its potential impact on the business

## Creating an Action Plan

### Step 4: Mitigate High-Priority Risks

The final step in creating a compliance risk assessment matrix is to create an action plan to mitigate those risks that are deemed high-priority. This may involve:

* Implementing new policies, procedures, or processes
* Modifying existing ones to reduce the likelihood of potential risks occurring

## Conclusion

A compliance risk assessment matrix is a valuable tool for identifying and prioritizing potential risks that could impact an organization's compliance with regulatory requirements. By regularly updating the matrix, organizations can proactively manage their compliance risk profile and ensure that they are well-positioned to respond to changing regulations and industry trends.

## Compliance Solutions from ComplyLog

At ComplyLog, we offer a suite of tools designed to help businesses streamline and digitize their compliance processes. Our solutions include:

* IntegrityLog: managing whistleblowing reports
* InsiderLog: managing insider lists
* TradeLog: managing employee personal trading in compliance with regulatory requirements

## Request a Free Demo Today

To learn more about how ComplyLog can aid your business, request a free demo today and discover how our compliance solutions can help you proactively manage your compliance risk profile.