Originally published in ABA Risk and Compliance, January/February 2026

Risk assessments offer a systematic process for institutions to identify, evaluate, and prioritize potential risks that could impact their operations, assets, or goals. At their core, risk assessments are like a GPS. They show you the road your institution is taking and, based on your current position, allow you to chart a path forward to your desired destination. They play a crucial role in making informed decisions, ensuring regulatory compliance, and building resilience against threats such as cyberattacks, operational disruptions, and legal liabilities.

Choosing the right approach to implementing a risk assessment program —  whether building a custom in-house tool or buying an out-of-the-box risk assessment module from a governance, risk, and compliance (GRC) provider or other technology company, or something in between —  is a strategic decision that affects costs, flexibility, efficiency, and long-term scalability. This article will explore how to decide between building or buying a risk assessment, compare the level of effort involved in each option, examine the pros and cons that come with both options, and outline best practices to ensure a successful implementation.

The purpose of risk assessments

Understanding the purpose of risk assessments is essential for selecting the appropriate approach and achieving meaningful outcomes. Institutions use risk assessments to evaluate a wide range of risks, including cybersecurity vulnerabilities, operational disruptions, regulatory non-compliance, financial exposure, and brand value. These assessments are not only critical for meeting regulatory requirements and passing audits, but also for supporting strategic planning, investment decisions, and enterprise-wide risk management.

Depending on the institution’s needs, risk assessments can be one-time projects, for instance, during a system implementation or merger, or part of a continuous risk management program that evolves with the business. Whether ad hoc or ongoing, the goal remains the same: to provide clarity on applicable risks, prioritize actions to mitigate those risks, and support informed decision-making throughout the risk lifecycle.

Deciding on building or buying

Deciding whether to build or buy a risk assessment involves balancing cost, control, customization, and capability. The right choice depends on several key business factors, including core system requirements, time constraints, budget, and internal expertise. Purchasing a program is often the preferred route when a quick, out-of-the-box option is needed, especially one with standard workflows, predictable costs, built-in reporting, vendor-managed support, and compliance features. This path is particularly effective for institutions with limited technical resources or those prioritizing rapid deployment and scalability. However, many institutions that expect out-of-the-box risk assessments to function seamlessly from the outset are often surprised by the significant time and effort required to tailor the risk assessments to fit their institution’s needs. 

While purchasing a risk assessment from a GRC or other technology provider may provide the framework of a risk assessment and a convenient user interface, institutions should consider the time investment of risk and compliance resources to ensure the tool is fit for purpose. Institutions that buy a risk assessment typically find that the tool is readily configurable to their business requirements; however, customizations beyond those configurations often require lengthy and expensive code changes. Customizing the risk assessment to meet the institution’s specific needs is not only a best practice, but also a requirement for ensuring the risk assessment yields outputs that are meaningful and actionable. Therefore, institutions need to be aware that customizations beyond standard business requirement configurations can become a project unto themselves. 

As such, institutions purchasing a risk assessment should consider the purchase as the first step in a multi-step process that still includes personnel, process, and technological investments. These investments may include internal resources and additional external expenditures, such as development resources from the GRC or other technology providers, as well as third-party expertise. 

Alternatively, building a custom program is better suited for institutions with complex or evolving workflows, as well as those with strong internal development capabilities and established risk management programs. It is also ideal when deep system integrations, strict data control, or highly tailored analytics are necessary, or when the institution expects significant future scaling and automation. However, building requires a longer development timeline and greater ongoing responsibility for maintenance and updates. 

For institutions willing to invest the resources (including personnel, processes, and technology) into building a custom risk assessment, the opportunities are endless. The institution has complete control over the form and function of the risk assessment, including the methodology and scoring. With that control comes other responsibilities, including performing regular maintenance, documenting the methodology, and managing changes to the risk assessment tool to support changes in strategic vision and operations.

The following comparison highlights the core differences between the two approaches:

Level of effort: What each path demands

The level of effort required to implement a risk assessment program varies significantly depending on whether it is built internally or purchased from a vendor.

Buying a risk assessment program generally requires less time and fewer internal resources if the institution decides that the out-of-the-box risk assessment is sufficient for its needs. Most vendor platforms can be implemented relatively quickly through configuration, setup, and basic user training. However, successful adoption still involves onboarding the vendor, aligning the tool with internal workflows, and providing support to users as they transition to the new system. While this option reduces the technical burden, it does create some dependency on the vendor for product updates, customizations, and support. 

Additionally, there are limits (and typically costs) associated with customizations beyond standard configurations to meet business requirements. For the most part, an out-of-the-box risk assessment purchased from a GRC provider or other technology company will require some form of customization before it is fit for purpose. If necessary customizations are limited to configuring the tool to existing business requirements, this may not be difficult. Anything beyond that, however, can require costly and time-intensive code changes. Depending on the scale of the customization, this can quickly become an expensive and protracted project that consumes significant internal resources. Understanding the institution’s expectations for its purchased risk assessment is critical to ensuring a clear understanding of the true cost of purchasing a risk assessment. 

The trade-offs for speed and relative simplicity are less control over the platform’s flexibility, future changes, and customization options, as well as significant resources expended on customizations that the institution may have avoided by building its own tool. In recognition of these trade-offs, many institutions employ a “hybrid” approach, where they purchase the risk assessment tool and simultaneously plan future expenditures to ensure that the tool is sufficiently customized.

Building a custom risk assessment program, on the other hand, requires a substantial investment of time and resources. The process involves multiple phases, from detailed planning and design to development, testing, and deployment, all of which require careful coordination and skilled personnel. This effort also involves software developers if the institution wants to build a proprietary system and requires the participation of risk and compliance experts, project managers, and business unit stakeholders. In addition to the initial build, the institution must prepare to manage ongoing responsibilities, including maintenance, updates, bug fixes, and user support. This route offers greater control and flexibility but requires long-term resource commitment and strong internal technical and domain expertise.

Additionally, institutions must consider internal change management when deciding whether to build or buy a risk assessment. As with anything, the risk assessment will need to change over time to adapt to business strategies or new requirements. As a result, changes to the risk assessment must be in accordance with the institution’s change management processes. While purchasing a risk assessment tool may streamline some aspects of the risk assessment implementation process, reliance on a third-party vendor throughout the change management lifecycle may offset some of the benefits of a purchased risk assessment solution. Institutions that build their own risk assessments gain efficiency when integrating the risk assessment into existing change management processes, due to the underlying institutional knowledge inherent in in-house development..

Freedoms and Constraints

Choosing between building or buying a risk assessment also involves understanding the freedoms and constraints associated with each approach. Building a risk assessment internally offers significant freedom and flexibility, including complete control over functionality, extensive customization, and the ability to design tailored integrations that align closely with existing systems and workflows. 

Additionally, the institution has carte blanche in terms of the methodology for identifying, measuring, and reporting on risks and controls. However, this path comes with notable constraints, namely, a higher upfront investment, a longer development timeline, and the ongoing responsibility of maintaining and updating the system. Under the previously discussed hybrid model of buying a risk assessment but planning for future investments, institutions still encounter higher costs and longer development timelines but offset these investment and timing constraints through partnership with the vendors or other third parties to create efficiencies and spread out the work.

In contrast, purchasing a solution offers the convenience of a relatively quick deployment, access to vendor support, and built-in features that can accelerate the implementation process. Yet, this convenience, too, comes with limitations, such as restricted customization options, dependency on the vendor for updates or feature changes, and recurring licensing costs. Additionally, to the extent the institution wants to customize the purchased risk assessment, vendor developer costs can add up quickly. Understanding these trade-offs is essential to aligning the solution with institutional goals and capabilities.

Best practices

Implementing a risk assessment program effectively requires a deliberate, strategic approach grounded in best practices. It begins with clearly defining objectives and establishing consistent risk criteria to ensure alignment across the institution. Engaging key stakeholders early in the process fosters buy-in and helps shape a solution that meets both operational and regulatory needs. Integration with existing systems, such as enterprise resource planning (ERP), information security, incident management, or GRC platforms, should also be planned from the outset to streamline workflows and ensure data consistency. Likewise, the institution must prioritize data security and regulatory compliance from the outset, as these are often closely scrutinized during audits and assessments.

Regardless of whether the solution is built in-house or purchased, it is essential to thoroughly understand the underlying methodology, including the adequacy of both quantitative and qualitative inputs and outputs. Buying a program does not eliminate the need for a deep understanding of how risk is measured, documented, and reported; the vendor will not be there during an audit or regulatory exam to explain the logic behind the model. Therefore, the institution must equip teams to articulate the methodology as thoroughly as if they had developed it themselves. Ultimately, institutions should design and implement risk assessment processes that are scalable and long-term relevant, incorporating regular testing, user training, and iterative improvements to adapt to evolving risks and changing business needs. 

Institutions must also consider multiple risk assessment methodologies (and, as such, numerous build-it-or-buy-it scenarios) to support different business functions. Model risk assessments differ significantly from fair lending risk assessments, which in turn vary from privacy risk assessments, and so on. Specific risk assessment processes may be better suited to buying a risk assessment tool, while others may require so much customization that building it is more optimal. Considering the process being risk-assessed, therefore, is critical to making the best decision on whether to build or buy the risk assessment in question.

Conclusion

Deciding whether to build or buy a risk assessment solution is a strategic choice that becomes particularly complex in the financial services sector, where regulatory expectations, data precision, and risk diversity are exceptionally high. Success hinges on aligning the chosen approach with business objectives, available resources, and the institution’s overall risk maturity.

Financial institutions must also consider whether a single tool can adequately support all risk types or whether a more modular or hybrid approach is warranted. The methodology for calculating inherent risk, control effectiveness, and residual risk forms the backbone of the risk assessment and must align with enterprise standards while maintaining objectivity. 

Though off-the-shelf solutions offer speed, vendor support, and compliance-ready frameworks, making them well-suited for institutions seeking standard functionality and faster implementation, they may fall short in addressing institution-specific risk taxonomies or providing the quantitative rigor required for model-driven assessments. Conversely, building a solution allows for greater adaptability to complex or evolving workflows, such as those needed for operational, cyber, or credit risk, but also demands substantial time, technical expertise, and ongoing maintenance.

While no tool will perfectly capture the whole risk landscape, institutions that align their selection with both enterprise standards and the unique demands of financial regulation can make informed decisions that lay the foundation for meaningful and defensible risk assessment practices.

In the next issue, we will delve deeper into the methodologies for assessing inherent risk, control effectiveness, and residual risk, with a particular focus on the critical distinctions between quantitative and qualitative approaches and their implications for effective risk assessment.

About the authors

Ryan Labriola is a Senior Manager with Asurity Advisors. Ryan has expertise in military lending laws and regulations, including the Servicemembers Civil Relief Act and the Military Lending Act. He has advised financial institutions and non-bank lenders on SCRA and MLA compliance, and has participated in significant lookback and remediation engagements relating to servicemembers’ benefits and protections under federal and state law.

Melissa is a Senior Consultant with Asurity Advisors. She is an experienced advisory professional with over seven years of experience assisting clients in the financial services sector. Throughout her career, she has led and supported a diverse range of projects, including data quality reviews, regulatory compliance initiatives, business process optimization, and developing and performing risk assessments. Melissa is also known for her technical expertise, particularly in building advanced Excel tools that automate manual tasks, streamline workflows, and enable deep analysis of complex datasets. She is also highly skilled in regulatory compliance, data analysis, problem-solving, process improvement, and project management, ensuring successful project completion.