Risk Control Self-Assessment (“RCSA”)

In today’s dynamic business environment, managing risks effectively is critical to ensuring operational resilience, complying with regulatory requirements, and achieving organisational objectives. The risk control self-assessment (“RCSA”) process is a vital tool that empowers organisations to proactively identify, evaluate, and mitigate risks.

What is the RCSA process?

The RCSA is a structured and collaborative approach to assess risks and controls within the operations.

The process involves engaging various stakeholders to:

1. Identify Risks: Understand potential threats to achieving organisational objectives.
2. Assess Risks: Evaluate the likelihood and impact of identified risks.
3. Review Controls: Assess the effectiveness of current risk controls.
4. Mitigate Risks: Design and implement action plans to address gaps or improve existing controls.

Benefits of RCSA

The awareness of the risks it is exposed to and the RCSA process, in particular, provide several benefits
to the company.

1. Proactive Risk Management: The RCSA helps organisations identify and address risks before they materialise.
2. Enhanced Control Environment: The RCSA ensures controls are aligned with identified risks.
3. Informed Decision-making and Resource Allocation: The RCSA process provides leadership with actionable insights on risk exposure and helps allocate resources based on business needs.
4. Improved Compliance: The RCSA demonstrates due diligence in meeting regulatory and governance requirements, namely where the company applies a risk-based approach.
5. Collaboration and Awareness: The RCSA fosters a risk-aware culture across all levels of the organisation.

Key steps in the RCSA process

The RCSA process commonly follows the steps below to identify and assess the inherent risks and the existing controls, determine the residual risks based on these two factors and, finally, plan for required actions, if any.

1. Risk Identification

The relevant stakeholders identify the inherent risks that the company and its operations are exposed to. You can leverage tools like process maps, past incident reports, and risk libraries for a comprehensive view.

2. Inherent Risk Assessment

The identified inherent risks are rated based on two criteria: likelihood (frequency) and impact (severity). The risk rating is applied based on a risk matrix.

3. Control Evaluation

Existing controls are listed for each identified risk and evaluated for their adequacy, effectiveness, and efficiency. For this purpose, findings from recent quality assurance and internal and external audits should be considered.

4. Determination of Residual Risk

The residual risk of each inherent risk is determined by the rating of the inherent risk and the strength of the respective controls in accordance with a pre-defined matrix. Residual risks in the same category may be consolidated to obtain an easier understanding of the company’s risk exposure.

5. Action Planning

Where necessary, corrective action is developed, namely in case of inadequate controls or where the residual risk exceeds the company’s risk. Deadlines for the action items are determined, and ownership for their implementation is assigned.

6. Monitoring and Reporting

The progress of mitigation efforts is continuously tracked to ensure their timely implementation and, thus, enhanced risk mitigation. Findings are documented, and the reports are shared with key stakeholders for transparency and accountability.

Tailoring the RCSA Process for Your Business

Every organisation is unique, requiring a customised specific RCSA. Tailoring the RCSA to your business ensures that risk identification and mitigation strategies align with the organisation’s unique objectives, industry, and operational context. This customisation enhances the relevance, efficiency, and effectiveness of your risk management efforts.

We at Ingenia Consultants Pte. Ltd. support our clients in setting up enterprise-wide risk management frameworks commensurate with the nature, size and complexity of their operations. Namely, we help with the RCSA process and document it.

• Industry-specific risk libraries: We provide guidance to your company in identifying and assessing applicable risks leveraging our expertise across various sub-sectors of the financial industry, such as fund management, external asset management, payment services and digital asset services.

• Stakeholder engagement: We facilitate workshops and meetings to align teams with RCSA objectives.

• Periodic reviews: We establish a process and assist your company in reviewing your risks and refining the RCSA process based on evolving risks.

For any further information, please contact:
Vijay Bharadwaj
Director
Ingenia Consultants Pte. Ltd.
vijay.bharadwaj@ingenia-consultants.com