A risk and control self-assessment (RCSA) helps to ensure that all enterprise risk management objectives are fulfilled in a fair amount of time. According to Six Sigma, companies that automated their RCSA process experienced a 50% decrease in risk assessment completion time.

A facilitated RCSA can help a bank improve its control environment in the following ways:

  • Raising awareness of corporate goals and the critical role of internal control.
  • Motivating employees to develop and implement control processes carefully and continuously improve procedures.

The RCSA process requires risk stakeholders to perform self-assessments of the risks that affect their departments and the impact of the controls that have been put in place.

RCSA reports enable management to keep an eye on the risk exposure of the organization and quickly mitigate any emerging risks.

Common RCSA Challenges

Organizations will experience some challenges when conducting a self-assessment. This includes:

  • Human resistance to change
  • Inconsistent assessments
  • Poor stakeholder engagement
  • Resource limitations with manual processes
  • Data quality issues
  • Lack of integration with other risk management systems

However, Implementing an automated and standardized approach allows organizations to mitigate these challenges.

The RCSA Process

The RCSA process is critical for businesses in the financial sector. Risk and Control Self Assessments help businesses detect the problems that are occurring across the enterprise.

The objective is to ensure that if there is a vulnerability in the risk framework or if a risk control is not performing optimally then it can be detected, and the issue resolved.

The RCSA process is also instrumental in increasing risk awareness among employees. Including them in the assessment ensures that they are familiar with the factors that increase risk and exercise caution when necessary.

As a risk and compliance intelligence platform, Predict360 offers a unique approach to RCSA process and workflow modernization.

Follow these steps to learn how automation increases the benefits while improving the overall self-assessment process:

Overview of Steps

Step 1 Document risks and controls
Step 2 Identify the relevant risks
Step 3 Conduct a risk evaluation
Step 4 Identify and evaluate controls
Step 5 Take corrective actions
Step 6 Monitor the results

These manual steps can be automated and standardized to be more efficient. Read on to understand the benefits of an RCSA system.

Step 1 – Document Control Environment

The first step of conducting an RCSA is to document risks and controls for risk mitigation. Banks and other financial institutions typically take a manual approach to organizing this information.

The Risk Manager usually compiles a master Word or Excel document of the regulation that requires an assessment. In this document, there is Regulatory Risk, Controls, and a Risk Rating. The Risk Manager sends multiple variations to business line managers.

The Impact of Standardization

RCSA automation solutions centralize the documentation process. All data is managed in a central server where it can be shared with other employees, instead of a manual consolidation process.

RCSA automation solutions standardize the risk taxonomy for the whole organization which allows executive level employees to quickly identify significant risks affecting a large portion of the organization.

Step 2 – Identification of risks

Once all the processes and deliverables have been documented, the next step is to identify the risks which are linked with the activities, processes, and deliverables of the department.

Department managers usually look at the results of audits, previous experiences, and external feedback to understand any negative possibilities.

Impact of Standardization

CSA automation solutions standardize the risk taxonomy for the whole organization which allows executive-level employees to quickly identify significant risks.

Step 3 – Risk Evaluation

Evaluation is a necessity because management needs to prioritize their understanding and risk reporting.

Each department’s management will evaluate the risks that affect their department based on severity.

Impact of Standardization

Risk evaluation is often inconsistent because every person evaluates the risks based on their personal understanding.

RCSA automation solutions automate the workflow and give everyone with access rights the ability to collaborate on risk evaluations.

Step 4 – Control Identification and Evaluation

The controls that mitigate the risks also need to be identified and evaluated. This is easier than identifying risks because the controls have been put in place by the management thus there is no need to discover them.

Impact of Automation

The sharing of documents and collaborative features present in RCSA solutions ensures that the controls are evaluated fairly.

Step 5 – Corrective Actions

Significant findings in RCSA reports result in corrective action planning. These plans are deployed after evaluating and prioritizing risks and controls across the organization.

Impact of Automation

Automated RCSA solutions allow managers to create action plans directly from the interface where they view the results of the RCSA reports.

This makes it easy for everyone to see the plans that need to be acted on because all the required information is available on a single dashboard.

Step 6 – RCSA Monitoring

Organizations usually periodically monitor RCSA report results from across business units. This process is handled by the risk department.

Impact of Automation

RCSA automation eliminates the need to manually monitor RCSA results. Stakeholders get notified of any updates automatically, so no important information is missed.

Beyond efficiency gains, standardized and automated RCSA frameworks create a foundation for real-time risk intelligence. They also foster a stronger risk culture across the organization. Implementing Predict360 empowers organizations to transform self-assessment into a proactive advantage.

Want to see how an RCSA solution will benefit your organization? Get in touch with our risk experts to request a demonstration.