Risk control and management are fundamental for operational continuity and the success of every business. Not having a risk management plan is entrusting your business's survival and success to chance. And given that about 90% of businesses fold within two years of being hit by a disaster, you cannot afford to operate without factoring risk control. A risk control matrix is a good place to start, as it helps you effectively prepare your business for future risks.

What Is a Risk Control Matrix?

A risk control matrix (RCM) or risk and control matrix (RACM) is a specially designed tool for documenting and evaluating the potential risks your organization faces against the control measures you’ve put in place to mitigate their impact. Think of an RCM as a litmus test for your business’s risk profile and preparedness, and the projected outcome of your risk controls.

A risk control matrix analyzes the probability of particular risks occurring and rates them according to their odds. Rating could be on a probability scale of 1 to 10, or using adjectives such as very likely, even chance, or impossible. On the other hand, the RCM analyzes and rates how bad the consequences would be if the projected risks happened in real life.

Contrasting these two factors gives businesses a realistic path to risk management. The RCM guides risk professionals on what risks to prioritize, assess the effectiveness of their existing risk controls, and decide which controls to modify and to what degree. A well-established RCM is essentially a risk control playbook that professionals reference to conduct risk management effectively.

Core Components of a Risk Control Matrix

A typical RCM has many moving parts that integrate to make it feasible. It’s not a one-day, set-it-and-forget-it endeavor, but a dynamic process that needs constant fine-tuning as circumstances evolve. Let’s explore each component and its role in enabling RCM.

Business Process/Objective

Establish the scope of the risk control matrix by assigning specific business goals, processes, or projects that should be assessed. Set the objective of the RCM, stating the desired outcome of the process. For instance, you could earmark your IT control process for evaluation, with the central objective of enhancing cybersecurity protocols.

Potential Risks

Outline all possible risks that can derail the achievement of the business goals you’ve established by conducting a comprehensive risk identification process. Define risks and group similar ones to streamline risk control. This process requires you to engage stakeholders extensively, review past risk assessments, and the projected risks.

Existing Controls

Review the existing controls for each potential risk and gauge their effectiveness in achieving the desired outcomes. Determine if the risk controls are preventative, detective, or corrective, and whether they fit the risk profile of the potential risks. Also, assess if the controls align with the industry standards and your company’s policies.

Control Owners

Designate the responsibility of designing, operating, and monitoring each control to specific individuals or departments. Assigning responsibility to control owners facilitates process accountability, accuracy, and timely completion. It also eases progress supervision and management, as you only hold specific individuals accountable.

Risk Assessment (Likelihood & Impact)

Conduct a risk assessment to establish risk likelihood and the associated impact. Create a probability scale or a standardized rating system to rank each risk and its expected impact. Ranking risk probability and its consequences facilitates risk prioritization and guides businesses to allocate control resources and efforts matching the risk and impact profiles.

Control Effectiveness

Assess the potential of each corresponding control by evaluating multiple criteria such as:

• Whether the control syncs with your organization’s financial and strategic objectives
• How well does the control comply with standard industry guidelines
• Whether the control integrates with your company’s existing processes, policies, and procedures
• The quality of data and information that the control is based upon
• A provision for continuous improvement to enhance and scale outcomes

Why Is an RCM Important?

These are the benefits of implementing an internal control matrix.

Systematic Risk Identification and Assessment

A well-founded control risk matrix provides an action plan that risk professionals follow to spot potential risks and evaluate their impact. This streamlines risk assessment processes in an organization, expediting implementation and outcomes as all personnel involved read and act from the same page.

Clear Documentation of Internal Controls

An RCM outlines and defines all internal controls that a business has established. Well-documented internal controls enable all risk management stakeholders to read and understand each internal control's purpose, implementation process, and desired outcome of each internal control. This cultivates buy-in among stakeholders, promoting healthy discussions and collaborations to improve internal controls.

Improved Accountability and Ownership

A risk control matrix delegates roles and duties to individual risk professionals or departments. Assigning control ownership fosters accountability, which is often a contentious issue in collaborative initiatives like risk management. This way, individuals or teams will not pass the blame for poor outcomes or claim praise for unearned merit because process ownership is delegated from the get-go.

Facilitation of Compliance Efforts

A risk and control matrix outlines the compliance standards a business is expected to follow. It provides a compliance template that risk professionals can follow to satisfy pertinent compliance standards, such as:

• Service Organization Control (SOC 2)
• Health Insurance Portability and Accountability Act (HIPAA)
• General Data Protection and Regulation (GDPR)
• Payment Card Industry Data Security Standard (PCI DSS)

Additionally, an RACM delegates compliance roles to competent individuals or departments, which expedites implementation speed and accuracy.

Support for Audit Processes

A risk control matrix establishes a framework that internal and external auditors can leverage to audit progress and outcomes. Without an established RACM, auditors would have to review processes in silos, which is resource- and time-intensive. But with an RCM, auditors can compare projected risks and outcomes to the real-life results and rate the efficiency and effectiveness of the internal controls.

Reduction in Operational Surprises and Losses

A risk control matrix outlines potential risks and their impact ratio. It gives businesses ample time to design mitigation strategies for loss reduction and enhance operational resilience. This way, your business won’t face risks out of the blue, unless it's novel risks like pandemic outbreaks you can’t predict. Even so, a well-rounded control risk matrix accounts for the possibility of novel risks and provides a template for mitigation strategies you can fine-tune and implement.

Building Your Risk Control Matrix: A Step-by-Step Guide

An effective risk and control matrix should be tailored to address your business’s pain points. This means customizing your RCM from scratch by following these steps:

• Step 1: Define Business Processes and Objectives: Identify the key processes within the organization that need to be analyzed. Rank these processes according to their significance in the operational continuity of your business. This creates the scope of the risk control matrix and influences the outcome of the entire process. That’s why you must earmark the most consequential processes that can tank your business or cause significant damage to your bottom line when disrupted.
• Step 2: Identify Potential Risks: Brainstorm and document all possible risks associated with each process or objective. Involve all relevant stakeholders to mine detailed and multi-perspective insights regarding potential threats and create a list of risks. Summarize the risks to the most potent ones and categorize them under strategic risks, operational risks, external risks, and financial risks.
• Step 3: Identify Existing Controls: For each identified risk, document the controls currently in place to mitigate it. Establish if these controls are proactive or reactive, whether you have enough resources (personnel, knowledge, infrastructure) to implement them, and if they align with the latest industry regulations.
• Step 4: Assign Control Owners: Clearly designate the individuals or teams responsible for each control. Designating roles fosters accountability, accuracy, and expedites control implementation because control owners dedicate their full attention and energy towards achieving the desired outcome.
• Step 5: Assess Risks (Likelihood and Impact): Evaluate the likelihood and potential impact of each risk before and after considering the existing controls. You may want to categorize risk likelihood under these five categories: Highly likely: Risk events with a 91% chance of happening
  Likely: Risk events with a 61-90% chance of happening
  Possible: Risks with a 41-60% chance of occurring
  Unlikely: Risks with an 11-40% chance of happening
  Highly unlikely: Risks with a 0-10% chance of occurring
• Step 6: Evaluate Control Effectiveness: Determine how the effectiveness of each control is assessed and documented. Emphasize the design and implementation of each control and create a control testing schedule to continually monitor the progress and performance of your controls.
• Step 7: Document and Maintain the RCM: Explain the importance of a centralized and regularly updated RCM. Documenting your RCM fosters implementation uniformity and continuity across your organization. Updating your RCM keeps it consistent with the evolving business risks, ensuring it doesn’t become obsolete or complacent.

Best Practices for an Effective Risk Control Matrix in 2025

An effective risk control matrix should be dynamic and flexible so it can continually embrace and integrate evolving business risks and new risk management practices and technology. Follow these best practices to create an effective RCM optimized for today’s risk landscape.

Integration With GRC Technology

Integrating your RACM with an innovative governance, risk, and compliance (GRC) software opens new opportunities for automating risk assessments and control processes. A reliable, AI-powered GRC software like Onspring helps risk professionals optimize their risk data in more meaningful ways, like automating real-time alerts when risk profiles change.

Regular Review and Updates

Risk evolves as market dynamics shift globally. Unplanned risks like natural disasters require businesses to review their RCM and integrate new elements and provisions that address the new changes.

Cross-Functional Collaboration

Risk control and management involve different stakeholders such as employees, investors, auditors, regulatory authorities, and executives. Efficient collaboration facilitates faster RCM development and captures all brilliant risk control ideas from different stakeholders with varying perspectives.

Clear and Concise Language

Drop overly complicated risk jargon and use standard business terms to identify and describe risk and control matrix components. Instead, use straightforward language that is easily understood by all stakeholders.

Focus on Key Risks

Weigh the risks posing the most damage to your business continuity and objectives, and channel company resources to mitigate them. Doing so lowers loss ratios and promotes operational efficiency.

How Onspring Can Help You Create a Dynamic Risk Control Matrix

Onspring has been the top GRC software in Info-Tech Research Group’s Leader Quadrant for five years running. The Info-Tech Research Group data quadrant evaluates and ranks products based on feedback from IT & business professionals — real end-users — and compares that feedback to all other category vendors.

We leverage our vast experience in risk management to help you create a comprehensive risk control matrix customized to your company's pain points and objectives. Schedule a demo and experience firsthand the profound transformations Onspring can bring to your business.