1. Using Financial Reporting Compliance
  2. Perform Inherent Risk Analysis

Perform Inherent Risk Analysis

Perform inherent analysis to determine the level of threat posed by a risk before any treatments are in place to address it.

Analysis may be qualitative or quantitative: you may select, and models may return, either labels or numbers (respectively) to rate elements of the risk and the risk itself.

Prerequisites

Select the risk you want to analyze: In the Risks search page, click the name of the risk. A record of that risk opens.

Ensure that an analysis model is selected for the risk. If so, the Definition tab of the risk record displays the name of the model. If not, edit the risk to select an analysis model. (The model is either qualitative or quantitative, and determines the type of analysis you'll perform.)

Review Past Analyses

You and other users may analyze a risk any number of times. If any past analyses exist, you can review their results as background for a new analysis.

  1. Click the Analysis tab.

  2. The Analysis panel displays a row for each past analysis.

    • Each row displays summary information about its analysis. You can click an Expand icon to view greater detail.

    • Within a row, click an analysis date to open a View Analysis page. It displays complete details. (In that page, click the Done icon to return to the Analysis tab.)

Perform a New Analysis

To perform a new analysis:

  1. Click the Analysis tab (if it's not already selected).

  2. Select the Create Analysis icon. A Create Analysis page opens.

  3. Enter values in the Analysis Details panel. At minimum:

    • A description. This may, for example, explain how changed circumstances justify a new analysis, when one has already been conducted.

    • A due date. You may be setting up an analysis to be completed later. (At that point, you may enter a separate target completion date if it will differ from the due date.)

  4. If descriptive flexfield segments have been defined for risk analyses, these appear as fields in an Additional Information panel. Provide values for these fields.

  5. Use the Likelihood panel to express the chance that circumstances defining the risk will actually occur. In the Likelihood Model field, select one of the likelihood models associated with the analysis model chosen for the risk you're analyzing. In the Inherent Likelihood field, set a value for it.

    • If the analysis is qualitative, select a model-defined label, such as Medium or High.

    • If the analysis is quantitative, enter a number between 1 and 100; the higher the number, the greater the likelihood. Also select a time frame value, which establishes a period over which the likelihood value is valid.

  6. Use the Impact panel to express the potential severity of a risk event. In the Impact Model field, select one of the impact models associated with the analysis model chosen for the risk you're analyzing. In the Inherent Impact field, select a value for it.

    • If the analysis is qualitative, select a model-defined label.

    • If the analysis is quantitative, enter a number from 1 to 100; the higher the number, the greater the impact. Time frame doesn't apply to impact.

  7. Review the results of the analysis. These include:
    • Likelihood and Impact ratings determined by the values you selected or entered. These appear in the Likelihood and Impact panels, and they're labels regardless of whether the analysis is qualitative or quantitative.
    • Inherent Risk, which is an overall risk rating that's displayed in a Risk Level Details panel. This value is a label for qualitative analysis or a number for quantitative analysis. The Risk Level Details panel also identifies the formula used to calculate the Inherent Risk value.
  8. Select Save and Close to return to the Analysis tab. There, the row for the analysis you performed displays results returned by the analysis model. These include the Inherent Risk rating, the Likelihood and Impact ratings, the models you selected to generate these values, and the state of the analysis.

Complete the Analysis

Although you can create and complete an analysis all at once, the expectation is that you may edit it after having initially saved it, to make adjustments in response to new findings about the risk. So the analysis is saved at first in an In Edit state. By the time the due date (or target completion date) arrives, however, you're expected to move the analysis to a Completed state, after which edits are no longer possible.

To make edits, or to complete the analysis:

  1. Click the Analysis tab (if it's not already selected).
  2. In the Analysis panel, select the row representing the analysis, then click the Edit Analysis icon.
  3. In an Edit Analysis page, do either of the following:
    • Make edits: Modify your selections for likelihood and impact models or their values; update the description, due date, or target completion date; or make changes to Additional Information fields.
    • Complete the analysis: Select Actions > Mark Complete.
  4. Select Save and Close. If you've made edits, the analysis remains in the In Edit state. If you've completed the analysis, its row in the Analysis panel is updated to show Completed in the State column and the date and time of completion in a Completion Date column.