A robust compliance risk assessment isn’t just about identifying risks—it’s about understanding how to manage them effectively and demonstrating you have thought about potential scenarios and planned how to control their effects. From my experience, successful assessments rely on honesty, precision, and a prevention-first mindset. Here are my top tips to help elevate your approach:
1. Record Both Gross Risk and Net Risk It’s important to separate gross risk (the risk without any controls) from net risk (the risk after controls are applied). This allows you to understand the full potential impact of a risk and evaluate how much your controls are really reducing it. Don’t skip this step—it’s essential for prioritising resources effectively
2. Be Honest About Control Effectiveness Controls are only as good as the results they deliver. Track their effectiveness regularly and be honest about gaps. If a control is partially effective or needs improvement, acknowledge it. Regulators value transparency and accept that risk requires constant scanning for change. Identifying enhancements early allows you to address them before they become major issues.
3. Prioritise Prevention Over Mitigation The best risk strategy starts with trying to prevent risks outright, not just mitigating them after they occur. Too often, firms jump straight to mitigation plans. While mitigation has its place, prevention is always the goal—particularly when it comes to regulatory risks that could lead to significant fines or reputational damage.
A successful compliance risk assessment isn’t just about ticking boxes—it’s about embedding a proactive, transparent, and effective risk culture across the organisation. With the right approach, you’re not only protecting the firm but also demonstrating its commitment to doing things right.
At Leaman Crellin our team’s expertise is unparalleled. We offer tailored solutions on all financial regulatory and compliance matters from consultancy and training to insights and regulatory alerts, get in touch to see how we can support you and your business.
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