Find out what risk classification is and how to do it here!

Managing a business can be challenging and requires responsibility from leaders. There are many variables involved in the security of a company. In this sense, one of the best ways to ensure it is through correct risk classification. This is essential not only for the healthy development of the organization, but also for data protection and the health of employees.

In view of this, it is possible to say that this concept is a great guide for decision-making. In general, the greater the risk, the more important it is to create rules, policies and guidelines that guarantee the security of the organization as a whole. This is why knowing the subject in depth is so important. Without this, the most diverse risks can affect the space and everyone involved in it, including fraud .

Check out this content to find out where to find information on risk classification and protect the work environment!

What is risk classification?

This includes everything from threats to the health of workers, known as occupational risk, to problems with data leaks . The latter, which are one of the most dangerous for companies today, occur for a variety of reasons, including:

• human error;
• not implementing a good anti-fraud system;
• failure in protection software;
• cyberattacks carried out by hackers , among others.

What are the possible categories of existing risks?

If the company wants to know its occupational risk, it simply needs to analyze NR-04. To do so, it must find the CNAE code and look for it in Table I of the Standard. Then, the manager needs to check whether the core activity performed matches the “Denomination” alternative. If this happens, it will be possible to know the degree of risk just by looking at the corresponding value.

But the truth is that there is more than just occupational risk. There are other levels of risk — and it is important for companies to pay attention to all of them. One of them, which has recently gained attention, is operational risk. In general, when hearing the term, many people understand that it involves financial risks. However, the topic goes beyond that.

In 1999, with the issuance of a text requesting banking supervision by the Basel Accord Committee, the issue gained real relevance, as it made risk assessment by financial institutions mandatory.

This is because they suffered major financial losses due to both management and security failures. So, they needed to invest in emergency reserves to cover potential losses . This practice opened the door for companies outside the sector to do the same, starting a movement around appropriate risk classification and policies that contemplate it.

Risk categories

In addition to occupational and operational risks, some other risks can be mentioned:

• of compliance;
• ergonomic;
• speculative;
• politicians;
• cyber , which includes fraud;
• strategic;
• physical, chemical or biological;
• financial, among others.

As you can see, fraud is a very important risk factor. This is because it is linked to different types of risks to which companies are exposed. Therefore, it is essential to understand the best ways to secure your business and avoid malicious attacks, as well as mitigate errors that involve internal data leaks.

How to map and classify risks?

As you can see, every firm will have to deal with unique hazards. Yours must therefore be well aware of the situation it is in. Regulatory Standards can be quite helpful at this time, but a strong compliance team is needed. Other actions can be performed in this regard, though. Go with the flow!

Perform a company diagnosis

When mapping and classifying business risks, it is essential that all sectors are involved. It is recommended that leadership gather the managers of each one and, together with them, analyze the areas separately.

By doing this — and listening to feedback from representatives — it will be easier to understand which risks each sector is exposed to and use the available literature (such as the NRs, already mentioned) to carry out the correct classification.

Understand the flaws

It is common for some procedural bottlenecks to be related to risk. Therefore, it is important to use the diagnosis mentioned above to understand which points generate errors in the company. It is also interesting to evaluate rework, which is usually a point that generates delays and problems for talents — and which may be related to potential risks.

Document the strategies

After understanding how to act on each of the risks to which the company is exposed, it is time to create policies to combat them. This is an important step, as risk management cannot be limited to verbal measures.

Train the team

It is also important to put risk management into practice. In other words, make employees' daily lives easier by organizing events, lectures, workshops and training sessions for them. Invite professionals who are experts in the field and explain, step by step, the best practices for mitigating risks.

Focus on online risks

Although cyber risks have been a part of companies’ routine for many years, the conversation surrounding them is recent. In this sense, it is likely that you have at least one acquaintance who “does not trust digital transactions ” or who “avoids making any purchases online”.

But the truth is that it is possible to navigate safely through the most diverse virtual environments — as long as you are equipped with the right tools. For companies, this is even more true. With the need for digitalization on the rise and the growth of transactions conducted over the internet, it is essential that businesses of all types carry out virtual risk classification .

It is necessary to understand how cyberattacks work, how legislation acts on data leaks and what precautions to take — and we will talk about this subject throughout this content.

Understand your business's exposure to fraud

Corporate fraud is defined as an intentional act carried out by members of the organization in search of advantages. However, it can also come from third parties outside the corporate environment. This does not mean that leaders should distrust their entire team at all times, which can even create discomfort in the workplace. It is only necessary to equip the team with the right resources, ensuring the protection of confidential information.

Invest in compliance

This point has already been mentioned, but given its great relevance, it is important to pay special attention to it. Proper compliance is one of the simplest ways to ensure that the company acts in accordance with the policies and standards applicable to the area.

In general, they are vast, which requires professional work from those who understand the subject. It is important that this team is equipped with the main resources capable of assisting the work, such as anti-fraud solutions.

Seek to perform internal and external audits

In addition to forming a compliance team, it is important to use audits as a preventive measure . These are checks carried out by the company's own management. If these are not sufficient, it is also possible to rely on external audits, conducted by professionals from outside the company. In both cases, the processes and policies in force will be evaluated, ensuring that they comply with the legislation.

With the above points, it will be easy to understand where the problems that can generate risks to the business come from. Most importantly, management will be able to classify risks, define priorities and understand where to start solving the issues that arise. Thus, risk management becomes a fundamental part of consistent and positive decision-making for the business.