Risk Monitoring Overview

Risk monitoring is an essential step in the overall risk management procedure. Since risk management is a perpetual and dynamic exercise, monitoring will always remain crucial in understanding the risks and how the implementation of changes affects them. The monitoring process offers valuable information to teams performing risk management operations and higher-ups who want to keep track of the progress. The first step to understanding risk monitoring is clearly defining risk, which is the uncertainty effect on objectives. If we dive deep into the definition of risk, we will determine that it is both uncertain and causes an impact on something. Risks have links to objectives in many ways that we cannot always identify. As risk management progresses, the clarity on your goals and related uncertainties become evident. E Guide - How to Establish a Culture of Risk Awareness and Compliance in the Banking Sector

Risk Monitoring and Control Process

The monitoring and control process continues throughout the lifecycle of a financial firm. Even though each form has varying levels of risks, the monitoring and control process has common steps that align with every firm throughout the financial sector.

Risk Management Planning

The first step of any risk monitoring and control process is planning. The risk management plan is a document a company prepares for risk forecasting. Risk planning aims to identify potential risks and create mitigation control to manage those risks. Assessing the likelihood and impact of each risk sets their priority level during the process.

Risk Register

A Risk Register is the source of truth when tracking risks within a company as it stores all the outlines and associated details of every risk identified. These registers become part of the process at the start and are updated with each new risk identified through apps, hazards, or identification sheets.

Variations and Changes

Updates on risks can happen any time during the process, but there is a conscious and deliberate effort to assess risks that arise due to any change. These can either be a general change in scope, forcible change of plan, or changes such as task shifting that can create new risks.


Information communication is another force that makes its way into risk monitoring and control. If the process runs long, the team members will learn, see, and hear added information. Basic information enables information sharing of new risks and hazards that pave the way for implementing different control measures.

Risk Assessments

Risk assessment is the last and most key step in the monitoring and control process. This step tracks and evaluates the success of the risk management effort. At the end of the process, the team that identifies risks also sits down to assess them. They calculate the accuracy of initial planning and changes made to reduce future risks further.

What is the Necessity of Risk Monitoring?

The importance of risk monitoring and control has increased more than before. Modern companies’ risks have become too complex and fueled by the pace of globalization. New risks constantly arise generated by the persuasive use of technologies. Risk experts have also dubbed climatic changes a threat multiplier for the coming years. The most recent risk that engulfed every industry, including the financial sector, is the Covid-19 pandemic. It evolved quickly into an existential risk threatening the health and safety of human resources necessary to run a company, communicate with clients, and conduct reputation management. Companies and businesses have made rapid adjustments to cope with this risk by monitoring its effects and controlling the flow of the workforce to make them less vulnerable. They have considered taking a reactive approach against the risk by immediate identification and assessment. Experts discuss that firms that run under heavy compliance regulations have better risk management processes than other firms. Banks and insurance companies run on risk and have a separate department for risk monitoring and control testing. Moreover, their risk has quantitative value rather than other firms whose risks remain qualitative. Their risk management is complex as it needs a deliberate and consistent approach.

Benefits and Challenges of Risk Monitoring and Controls Management

Effective management of risks and controls may affect the capital and earnings either positively or negatively. It also poses challenges even for firms with sophisticated governing and regulatory features with compliance strategies. Benefits of risk monitoring and controlling include:
  • Awareness of risk throughout the organization
  • Better and more coordinated compliance strategy with internal and external control mandates
  • Improved operational efficiency through consistent risk processes and control
  • Workplace safety and security
  • The differentiator in a competitive market
Besides benefits, the challenges include:
  • Investing time and money to comply with regulations and governing laws
  • Reaching an agreement on the severity of risks and their handling can lead to risk analysis paralysis due to complexity
  • Demonstrating the value of risk management to executives without numbers is difficult
A good starting point for any organization’s risk monitoring and control is to follow the best practices set by regulators. Financial institutions, insurance companies, and FinTechs can take advantage of risk and compliance software to take care of the challenges without compromising organizational objectives. Whether you require a regulatory change management solution or a third-party risk management solution, Predict360 is your best choice for this matter.