Risk Taxonomy

Overview

A risk taxonomy is a controlled hierarchical classification of risk types, causes, events, impacts, assets, and control domains used to organize reporting and analysis across an organization.

Risk Taxonomy is closely connected to Governance, Risk and Compliance (GRC), Incident Classification, and Risk Event. It differs from a risk register because the taxonomy provides common categories and relationships, while the register records specific risks and decisions.

Operational implementation should define mutually understandable categories, map local terms, govern additions and changes, preserve version history, connect events and controls, allow multi-label classification where needed, and train users on boundaries.

The principal failure modes include overlapping categories, excessive detail, missing emerging risks, local shadow taxonomies, forced single classification, broken historical reporting, and categories that mix cause, event, and impact.

Useful measures include unmapped risks, duplicate categories, classification consistency, taxonomy changes, event coverage, and reporting reconciliations across business units.

Operationally, teams should define mutually understandable categories, map local terms, govern additions and changes, and preserve version history. Key risks include overlapping categories, excessive detail, missing emerging risks, and local shadow taxonomies.

For Risk Taxonomy, the assessment should evaluate a controlled hierarchical classification of risk types, causes, events, impacts, assets, and control domains used to organize reporting and analysis across an organization. The assessment record should separate observed evidence supporting a controlled hierarchical classification of risk types, causes, events, impacts, assets, and control domains used to organize reporting and analysis across an organization from assumptions, state the time horizon and existing controls, and identify who owns any remaining exposure. Monitoring should test whether the conditions described in a controlled hierarchical classification of risk types, causes, events, impacts, assets, and control domains used to organize reporting and analysis across an organization have changed enough to require a new rating, treatment, or approval.