A risk control matrix (RCM) is a tool for documenting, assessing, and managing risks and their associated controls within an organization. It provides a structured approach to identifying risks, mapping them to controls, and evaluating the effectiveness of controls. It helps ensure that all potential risks are systematically managed and mitigated.

Read More about a Risk Control Matrix

Want to learn more about an RCM and how to create one? Read on.

What Are the Steps in Creating a Risk Control Matrix?

Here are the steps in creating an RCM.

Identify risksGather inputs from stakeholders to identify all potential risks.Create a detailed description of the risks, including what could go wrong.Classify the risks (e.g., operational, financial, strategic, or IT-related).
Assess risksAssess how likely the risks can occur and their potential impact or consequences.Use a risk rating based on likelihood and impact to prioritize which needs to be addressed first.
Identify controlsCreate detailed descriptions of the controls implemented to mitigate risks.Classify controls (e.g., preventive, detective, or corrective) and identify individuals or teams responsible for implementing and maintaining them.
Assess controlsEvaluate how effective controls are at mitigating risks and how often they will be performed (e.g., daily, monthly, or quarterly).
Calculate residual risksAssess remaining risks after controls are applied.Use residual risk ratings to indicate risk levels.Adjust control strategies to reduce residual risks to an acceptable level.
Document evidencePrepare supporting documentation that serves as evidence of the existence and effectiveness of controls, such as logs, reports, or audit trails.Regularly review and update the matrix to reflect changes in the risk environment or control processes.

What Are the Benefits of Using a Risk Control Matrix?

Using an RCM can bring about several benefits described below.

Systematic Risk Management

An RCM provides a structured approach to identifying and managing risks, allowing organizations to address them more promptly.

Enhanced Accountability

An RCM clearly defines control ownership and responsibilities, enabling organizations to assign responsibilities to specific individuals or teams.

Improved Control Effectiveness

An RCM helps organizations evaluate how effective the controls they applied are. And if they fall short, they can easily be adjusted.

Regulatory Compliance

An RCM assists organizations in demonstrating compliance with regulatory requirements through documented risk management processes.

Better Decision-Making

An RCM supports informed decision-making by providing a clear view of risks and controls.

Here is an example of an RCM.

Sample RCM

Who Uses a Risk Control Matrix?

Several members of an organization use an RCM including risk managers, risk analysts, internal auditors, IT security specialists, system administrators, compliance officers, C-suites, board of directors, business unit managers, process owners, external auditors, and legal advisors.

  • Risk managers use an RCM to identify, assess, and prioritize risks and ensure appropriate controls are in place.
  • An RCM enables risk analysts to analyze data and provide insights on the likelihood and impact of risks, helping to populate a specific matrix.
  • Internal auditors utilize an RCM to review and evaluate the effectiveness of an organization’s risk management processes and controls. They also ensure the matrix is updated and reflects the current risk landscape.
  • An RCM allows IT security specialists to identify and mitigate IT-related risks, ensuring proper security controls are in place to protect an organization’s assets.
  • System administrators use an RCM to provide inputs on vulnerabilities and controls related to an organization’s IT infrastructure to complete a matrix.
  • An RCM helps compliance officers ensure an organization complies with relevant laws, regulations, and industry standards. They monitor and enforce compliance-related controls documented in the matrix.
  • C-suites utilize an RCM to gain a high-level understanding of an organization’s risk profile and make informed strategic decisions.
  • An RCM enables the board of directors to ensure an organization manages risks appropriately and fulfills its governance responsibilities.
  • Business unit managers use an RCM to identify and manage risks specific to their departments. They ensure controls are implemented and effective in mitigating risks.
  • An RCM allows process owners to manage risks and controls related to their specific areas.
  • External auditors utilize an RCM to assess an organization’s risk management and control environment, ensuring accuracy and completeness.
  • An RCM lets legal advisors ensure the risks and controls identified and implemented, respectively, comply with legal requirements and help mitigate potential legal risks.

An RCM is essential for effective risk management. It helps organizations systematically identify, assess, and control risks, ensuring a robust and proactive approach to managing potential threats. Regular updates and reviews of the matrix are crucial to maintaining its effectiveness and relevance.

Key Takeaways