SIRA Methodology for Risk Management

The SIRA consists of five parts, Identify Risks, Assess Risks, Implement Controls and Procedures, Monitoring and finally Monitoring and Reporting, and Risk Evaluation.

The likelihood of a risk is assessed before it is identified in the SIRA.

The SIRA requires ongoing monitoring of risks and the effectiveness of implemented controls.

The SIRA is a one-time exercise that ensures an organization's compliance with laws and regulations.

Money laundering and terrorist financing are examples of operational risks that an organization may face.

Conducting a SIRA is not a regulatory requirement for financial institutions in any jurisdiction.

The understanding of the business environment is only necessary internally.

Mapping risk areas is the final step in the risk management process.

Reputational risks can be ignored in the risk management process.

Brainstorming sessions are not necessary in the risk identification process.

Risk indicators are used to identify potential risks.

The risk matrix is not a commonly used tool in risk assessment.

Risks should be prioritized based on their probability of occurrence only.

The risk assessment process is a one-time event.

Feedback from employees, customers, and other stakeholders is unnecessary in the risk assessment process.

Documenting and reporting findings, decisions, and actions is not necessary for transparency and decision-making.

SIRA Overview

SIRA consists of four parts: Identify Risks, Assess Risks, Implement Controls and Procedures, and Monitoring and Reporting
SIRA is an ongoing process to ensure an organization stays abreast of new and emerging risks and complies with changing laws and regulations

Identify Risks

Recognize all possible integrity risks an organization may face, including money laundering, terrorist financing, corruption, fraud, and market abuse
Understand the business environment internally (processes, products, services, systems, employees, customers, and partners) and externally (market, competition, regulatory environment, and potential threats)
Map risk areas, including financial risks (credit risk, market risk, liquidity risk), operational risks (system failures, process failures, human error, fraud), compliance and regulatory risks, reputational risks, and strategic risks
Use various tools and techniques, such as brainstorming sessions, interviews, surveys, data analysis, and developing risk indicators

Risk Assessment

Assess risks to understand how identified risks may affect the organization and determine which risks to prioritize in the mitigation process
Quantify each risk by determining its probability of occurrence and potential impact (financial, reputational, operational efficiency, etc.)
Use tools like risk matrices to position risks according to likelihood and impact, revealing high-priority risks
Prioritize risks based on probability, impact, cost, and effort to manage the risk, considering the organization's context, goals, capabilities, resources, and risk tolerance

Learn about the SIRA methodology, a four-part process for managing risks in organizations. Understand how to identify, assess, implement controls, and monitor risks such as money laundering, corruption, and fraud. Test your knowledge on the SIRA methodology and its applications.