Risk management plans are put into place to have an established method of understanding and mitigating the impact risk has on the business, with the goal of charting a path forward in the face of catastrophe.
What are the five risk management processes?
- The five risk management processes include risk identification, risk analysis, risk prioritization, risk treatment and risk monitoring.
Creating an IT risk management plan requires diligence and the ability to see risks clearly so plans are effective in the event of an emergency. To make these plans foolproof, a five step process is utilized.
Step one is to identify the risk by leveraging the collective knowledge and experiences of your team, fostering cross-functional learning and leaving no stone unturned. A good way to track risks long term is by utilizing a project risk register.
Step two is to analyze the risk by estimating the probability and fallout of each risk, including potential financial loss, time loss and severity.
Step three is to prioritize the risk by determining the likelihood of the risk coming to fruition and how it may impact ongoing operations.
Step four is to treat the risk once the risk becomes a reality, enacting the risk management plan that has been created and managing team resources meaningfully.
Finally, step five is to monitor the risk and keep in close communication with stakeholders regarding ongoing and emerging risks.
What are different risk management frameworks?
- There are six commonly used emergency risk management frameworks: the Casualty Actuarial Society (CAS) ERM framework, COSO ERM integrated framework, ISO 31000 ERM framework, COBIT ERM framework, the NIST ERM framework and the RIMS Risk Maturity Model ERM framework.
The CAS ERM framework is organized by risk type and is a sequential risk management process. The four risks include hazard risks, financial risks, operational risks and strategic risks. The COSO ERM framework utilizes five interrelated enterprise risk management components: governance and culture, strategy and objective-setting, performance, review and revision and information, communication and reporting. The ISO 3100 ERM framework is a cyclical process that works by integrating, designing, implementing, evaluating and improving risk management processes, then repeating the steps. The COBIT ERM framework is a flexible umbrella framework that aligns business and IT goals to eliminate risk management silos. The NIST framework is a U.S. government-created framework utilized by private entities working with government agencies. Finally, the RIMS Risk Maturity model evaluates risk vs business attributes using a scale of five different maturity levels.
Why is information security risk management important?
- IT risk management is crucial due to the catastrophic harm that IT risks can cause to both businesses and people.
Some of the most glaring business catastrophes that can arise from IT risks is liquidation, loss of equity or complete loss of business. Cyberattacks are often aimed at small businesses and insurance carrier Hiscox put the average cost per attack at $200,000 in 2019, enough to put many businesses out of business entirely. More importantly, data breaches have the potential to put both customers and employees at great risk of identity theft and personal loss.
In 2020, there were 1,001 total US data breaches resulting in the exposure of 155.8 million records. However, just 52% of breaches were caused by cybercriminals, with 25% due to system glitches and 23% because of employee error. Without a well-aligned risk management plan, the potential for real people to suffer due to error or unpreparedness becomes greatly increased and will lead to more harm and less trust in an organization.