Compliance Risk Assessment: What is it and how to conduct?

Shivam Jha

Shivam Jha

Feb 27, 2024

Compliance risks are characterized as possible harm or negative repercussions of failing to comply with legal, regulatory, or industry norms. Compliance risks impact businesses in different ways. A few prominent impacts are large penalties, loss of business prospects, loss of reputation, and legal problems.

A common misconception is that compliance risks originate and end in security functions. In reality, multiple functions within the business contribute to it. Lack of visibility, inadequate staff training, lax policies and procedures, and inadequate resources have often been identified as the root cause of non-compliance. It is important for businesses to recognize and manage compliance risks at early stages to minimize impact.

In this article, we dive deep into compliance risk assessment, get an overview of how it is done, and also give insights into how compliance automation can be used to achieve compliance assessment goals.

What is Compliance Risk Assessment?

A compliance risk assessment is a methodical procedure for discovering, evaluating, and ranking legal and regulatory risks that could harm the organization. It enables the organization to concentrate crucial resources on the most significant hazards and areas missing sufficient controls.

Performing rigorous risk assessments is deeply ingrained in every compliance guideline of compliance regulations and security frameworks. (Check out: Guide to compliance management)

Importance of Compliance Risk Assessment

Compliance Risk Assessment helps businesses identify and deploy patchwork on instances that could render them non-compliant if left unchecked.

Compliance risk assessment requires organizations to align their current cybersecurity policies, methods, and controls with compliance requirements. It identifies gaps and recommends implementation plans to maintain an effective compliance posture. 

Here are two ways you can use risk assessment to help achieve/remain compliant:

Identifies risks

The risk assessment process identifies existing vulnerabilities and projects future risks that could affect a business’s security posture. A thorough assessment determines the impact of individual risks identified and prioritizes patchwork implementation based on the risk.

This assessment offers businesses a chance to evaluate current policies, practices, and controls and assess their performance. Backed by this information, gap-remediation measures are implemented.

Ensures compliance

A compliance risk assessment reviews an organization’s current cybersecurity protocols, processes, controls, and norms and identifies the missing elements required to achieve compliance.

Non-compliance causes reputational damage, monetary penalties, impacts sales pipelines, and legal repercussions

Implement error-free compliance risk assessment with Sprinto

How to conduct a Compliance Risk Assessment?

Compliance risks can originate from a variety of sources, including regulatory requirements, contractual commitments, and internal rules and processes. Organizations can identify possible non-compliance areas, evaluate the likelihood and impact of non-compliance, rank risks, and create risk management plans by conducting a complete compliance risk assessment. 

Here are the steps involved in conducting a compliance risk assessment in detail:

1. Identifying the risks

Determine the compliance requirements that are applicable to your organization. Start by studying organizational rules and processes, industry standards, and governmental requirements. 

In this step, it’s crucial to document your important workflows, information systems, and transactions. Every business unit of the organization will need to contribute to these initiatives. Make a note of any areas in your core operations that point to potential regulatory non-compliance.

2. Assessing the outcomes of non-compliance

Map risks to consequences and affected parties. Once you are familiar with your company’s operations. 

3. Prioritizing major risks and developing mitigation strategies

Prioritize the risks and decide which ones demand immediate attention based on the impact assessment.

This may require creating new policies, processes, setting up training programs, or installing  new technology tools

Doing all of this might be a little overwhelming, but it ensures that your pre-breach and post-breach mechanisms are on point.

4. Implementing strategies and validate results

Implement steps based on your earlier learnings. Before moving on to the next risk, validating the effectiveness of your controls is a critical next step. Examine those findings and assess if the control is functioning as intended. If not, find out why and, if required, apply more or better controls to achieve the desired output.

5. Monitor and review your controls

Review your risk management protocols and periodically review their performance.  Compare your current scores with your previous scores and identify avenues that are underperforming and deploy improvement measures. These efforts contribute to enhancing your compliance program.

Also read: Importance of compliance management system

To Wrap It All Up

Performing a compliance assessment is critical to detect, prioritize, and manage any compliance risks that could impact their operations, reputation, and legal standing. 

Businesses can develop a thorough compliance risk assessment program that identifies and prioritizes risks, creates mitigation plans, puts them into practice, and routinely monitors and reviews them. Doing this manually can be a daunting task. A lot of engineering and security resources are spent on these processes.

Risk Assessment: The Sprinto Way

Sprinto’s compliance program is built to enable automation at every step of the way. Our integrated risk assessment model automatically maps action items to process owners and notifies them every time a risk is identified. A centralized dashboard gives organizations instant visibility on their compliance tasks and notifies process owners whenever efficiency metrics are not in the desired range.


Why conduct a compliance risk assessment?

Conducting compliance Risk Assessment assists businesses in identifying and reducing any risks that can result in a breach of laws and standards, including HIPAA, GDPR, PCI-DSS, etc. Not just that, compliance risk assessment helps you to build a good cybersecurity posture, avoid cyberattacks and even loss of reputation.

What is the 5 step process of risk assessment?

The 5 step process of risk assessment includes identifying the risks, assessing the outcomes of non-compliance, prioritizing major risks, implementing the risk mitigation strategies, and monitoring the protocols in place.

Who is responsible for compliance risk assessment?

It varies vastly depending on the company, but generally, a compliance manager or a cybersecurity expert looks into compliance management. However, it involves all the teams in a company to ensure there is no entry point for any cyber threats.

Shivam Jha

Shivam Jha

Shivam is our in house cybersecurity sage with over six years of experience in cybersecurity under his belt. He is passionate about making the digital world safer for everyone and whipping up Indian delicacies on the weekend.

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