What role do "controls" play in managing organizational risk?

Controls are essential components in risk management as they provide specific measures that organizations implement to manage or mitigate risks effectively. They serve various purposes, including reducing the likelihood of a risk event occurring, minimizing the potential impact if a risk event does take place, and ensuring that organizational processes align with business objectives and regulatory requirements.

Controls can take multiple forms—such as policies, procedures, technologies, and practices—that are designed to address a wide range of risks across different areas, including operational, financial, strategic, and compliance risks. The effectiveness of these controls is evaluated regularly to ensure they remain relevant and adequate in managing emerging risks.

In contrast, relying solely on financial management practices, focusing only on healthcare risks, or limiting controls to compliance purposes overlooks the broader scope of risk management and could lead organizations to inadequate risk exposure. Effective risk management necessitates a more holistic approach, engaging a variety of controls tailored to the specific risk landscape the organization faces.