MAT SAYS:- bringing RISK ASSESSMENTS into the 21st century with RISQED

Introduction

• Business Risk Assessments are critical tools for Jersey firms, far beyond mere documentation for board meetings.
• They must be front and centre of business operations, continuously fed with live qualitative and quantitative data to support informed decision-making, ensure compliance with Jersey Financial Services Commission (JFSC) regulations, and drive strategic resilience in a dynamic regulatory environment.
• This is why in 2024/25 and the Comsure team and I, with ESHCI (https://eshci.com/), will bring the BRA into the 21^st century
• https://www.comsuregroup.com/news/revolutionise-your-grc-strategy-with-risqed-beta-launch-ditch-the-spreadsheets-tired-of-excel-spreadsheets-for-risk-assessments/
• https://www.comsuregroup.com/media/rtpfa2rs/10842-comsure-risqed-a4-flyer-lr-for-linkedin.pdf
• https://www.comsuregroup.com/media/mx1dgh2g/10851-comsure-risqed-brochure-4pp-lr-for-linkedin.pdf

1️. Core Concept

1. Risk assessment forms the cornerstone of effective risk management for Jersey firms,
2. Commonly known as a BRA, they should enable proactive identification of threats and vulnerabilities before they materialise.
3. They should also
   1. Ensure alignment with strategic objectives, optimise resource allocation, and
   2. Ensure compliance with
      1. Jersey Financial Services Commission (JFSC) regulations and
      2. Local business laws, including employment, health and safety, and data protection requirements.

2. Key Dimensions of Risk

• Likelihood (Probability): The probability of a risk occurring, informed by historical data and local regulatory expectations.
• Impact (Severity): The potential consequences on operations, finances, or reputation, considering Jersey-specific legal and regulatory penalties.
• Velocity: The speed at which a risk can impact the firm, critical in fast-moving sectors like financial services in Jersey.
• Interdependency: How risks in one area (e.g., non-compliance with JFSC standards) may trigger or amplify others (e.g., reputational damage or fines).

👉 Effective risk assessment integrates these dimensions to assign risk ratings (low/medium/high/critical), tailored to the firm’s Jersey-specific risk appetite.

3️. Risk Assessment Methodologies

• Qualitative Assessment: Uses descriptive scales (e.g., low/medium/high) for initial assessments or areas with limited data, such as compliance with Jersey’s employment laws.
• Quantitative Assessment: Employs numerical models (e.g., loss expectancy, Value-at-Risk) for financial risks, often required by JFSC for regulated firms.
• Semi-Quantitative: Combines qualitative insights with weighted scoring, helpful in assessing operational risks like workplace safety under Jersey’s Health and Safety at Work (Jersey) Law 1989.

4️. Process Flow (Aligned with ISO 31000 and JFSC Requirements)

1. Establish Context: Define objectives, scope, and stakeholders, incorporating JFSC regulatory requirements and Jersey business laws (e.g., employment, anti-money laundering, and data protection under the Data Protection (Jersey) Law 2018).
2. Risk Identification: Identify potential risks, including regulatory non-compliance, workplace hazards, or cybersecurity vulnerabilities.
3. Risk Analysis: Evaluate likelihood and impact, factoring in Jersey-specific regulations and operational constraints.
4. Risk Evaluation: Prioritise risks based on the firm’s risk appetite and JFSC thresholds.
5. Risk Treatment: Implement controls (Avoid, Reduce, Transfer, Accept) aligned with Jersey’s legal and regulatory framework.
6. Monitoring & Review: Continuously monitor risks, updating assessments to reflect changes in JFSC guidance or local laws.
7. Communication & Reporting: Maintain transparent reporting to stakeholders and the JFSC, ensuring compliance with regulatory expectations.

5️. Examples in Practice

• Financial Risk Assessment: Stress testing portfolios against market volatility, ensuring compliance with JFSC’s risk management standards for regulated firms.
• Operational Risk Assessment: Mapping critical processes (e.g., client onboarding, IT systems) to identify vulnerabilities, ensuring adherence to Jersey’s employment and data protection laws.
• Cybersecurity Risk Assessment: Applying frameworks like NIST CSF to assess vulnerabilities, ensuring compliance with the Data Protection (Jersey) Law 2018.
• Health & Safety Risk Assessment: Identifying workplace hazards (e.g., ergonomic risks, fire safety) to comply with the Health and Safety at Work (Jersey) Law 1989 and related regulations.
• Employment Risk Assessment: Ensuring compliance with Jersey’s Employment (Jersey) Law 2003, addressing risks like unfair dismissal or inadequate employee protections.
• Financial Crime Risk Assessment: Evaluating risks of money laundering, terrorist financing, or fraud, ensuring compliance with Jersey’s Proceeds of Crime (Jersey) Law 1999 and JFSC’s AML/CFT Handbook.
• Prevention of Financial Crime: Implementing robust controls like customer due diligence (CDD), transaction monitoring, and staff training to meet JFSC’s AML/CFT requirements and mitigate risks of regulatory penalties.
• Outsourcing Risk Assessment: Assessing risks associated with outsourcing services (e.g., IT or compliance functions), ensuring compliance with JFSC’s Outsourcing Policy and oversight of third-party providers.
• Using Obliged Persons: Evaluating risks when relying on obliged persons for AML/CFT compliance, ensuring proper agreements and oversight as per JFSC guidelines.
• Using Legal Exceptions (Article 17/18): Assessing risks when applying equivalent jurisdiction or simplified due diligence exemptions under Articles 17 and 18 of the Money Laundering (Jersey) Order 2008, ensuring proper documentation and justification to avoid non-compliance.

6️. Risk Assessment Tools & Models

• Risk Matrix (Heatmap): Visualises likelihood vs. impact, tailored to Jersey’s regulatory environment.
• Bow-Tie Analysis: Maps causes, controls, and consequences, beneficial for JFSC compliance reviews.
• SWIFT (Structured What-If Technique): Scenario-based analysis for operational and regulatory risks.
• FMEA (Failure Mode & Effects Analysis): Identifies potential failures in processes, such as client data handling.
• Scenario & Stress Testing: Simulates financial or operational shocks, as required by JFSC for regulated entities.

7️. Strategic Value

• Compliance & Governance: Ensures adherence to JFSC regulations, Jersey’s Anti-Money Laundering (AML) regime, and local laws like the Data Protection (Jersey) Law 2018.
• Decision-Making: Informs resource allocation, investment decisions, and strategic planning within Jersey’s regulated environment.
• Resilience: Strengthens business continuity planning, critical for maintaining operations under Jersey’s strict regulatory oversight.
• Reputation Protection: Mitigates risks of regulatory fines, legal liabilities, or reputational damage, particularly in Jersey’s tightly regulated financial sector.

✅ Conclusion

• Risk assessment is a dynamic, ongoing process for Jersey firms, embedded into operations to ensure compliance with JFSC regulations and local business laws.
• By proactively managing risks, including those related to financial crime, outsourcing, and AML/CFT exemptions, firms can enhance their resilience, meet regulatory expectations, and maintain a strong reputation in Jersey’s competitive business landscape.

Sources

• https://www.comsuregroup.com/news/revolutionise-your-grc-strategy-with-risqed-beta-launch-ditch-the-spreadsheets-tired-of-excel-spreadsheets-for-risk-assessments/
• https://www.comsuregroup.com/media/rtpfa2rs/10842-comsure-risqed-a4-flyer-lr-for-linkedin.pdf
• https://www.comsuregroup.com/media/mx1dgh2g/10851-comsure-risqed-brochure-4pp-lr-for-linkedin.pdf
• https://www.comsuregroup.com/media/rtpfa2rs/10842-comsure-risqed-a4-flyer-lr-for-linkedin.pdf
• https://www.comsuregroup.com/media/mx1dgh2g/10851-comsure-risqed-brochure-4pp-lr-for-linkedin.pdf