Risk assessment tool 2 of 31
Root Cause Analysis (RCA) in risk assessment is about cutting through the noise and getting to the heart of the problem. Most organizations treat symptoms, not causes, which is like giving painkillers for a brain tumor. RCA forces you to ask “Why?” repeatedly until you expose the real issue.
Consider a case of financial fraud in a company A firm loses millions due to employee siphoning funds. Most boards react by firing the employee and tightening approvals. Wrong move.
Ask why five times:
1) Why did the fraud happen?? Employee exploited system loopholes.
2) Why did the loopholes exist? No proper segregation of duties.
3) Why wasn’t segregation enforced?? Management prioritized speed over controls.
4) Why did management prioritize speed?? Pressure to meet unrealistic growth targets.
5) Why were targets unrealistic?? Leadership set aggressive goals without risk assessments.
Root Cause is a toxic performance culture prioritizing results over governance. Not just better controls, but a mindset shift at the top. Otherwise, the fraudster you fire today is replaced by another tomorrow. That is how you link risk management to process optimization and value protection