What is Risk Management?

Organizations are social constructs that are affected by their environment. These influences can be either positive – opportunities for growth – or negative, mostly known as risks or threats. Adapting business strategy and policies to these risks is the purpose of risk management, so that organizations can control the impact of these threats to their operations.

The objective of risk management is to inform decision making on the practices and policies to be adopted and enforced to minimize the effects of “uncertainties to business objectives”. The effects of risk to operations can be anything from disruption to productivity and loss of revenue to a data breach and reputational damage. In an ever-changing world, where risks are imminent every day, following a risk-based approach can assist businesses to prioritize efforts to ensure business continuity and resilience and fortify themselves against uncertainty.

Cyber Risks are Business Risks

The increased reliance of digitally transformed businesses to cloud environments, remote work, complex and extensive supply chains, has elevated cybersecurity risks as a major risk to doing business. Businesses need to align cyber risk management processes with the already established procedures and policies for managing enterprise risk. Cyber risks can no longer be viewed as a siloed responsibility of the IT department. Instead, it is everyone’s responsibility, from the executive board to HR and IT teams. Failure to address these cyber risks will create security gaps that adversaries will seek to exploit, creating further risks for the organization. In fact, the World Economic Forum ranks cybersecurity failure as the 4th short term business risk.

Effectively managing cyber risks should be a top priority for modern businesses not only to protect themselves against cyber-attacks, but also to maintain compliance with a patchwork of security and privacy regulations, like GDPR, CCPA, HIPAA, SOX, PCI DSS, etc. Regulatory compliance is a competitive advantage for all businesses and failure to demonstrate that level of compliance may have financial consequences, let alone harm your brand.

The Need for a Risk Management Approach

As a result of this evolving cybersecurity and privacy risk landscape, business leaders everywhere, at institutions of all sizes and across all industries, are seeking the optimal ways to manage and reduce exposure to risk.

However, “build security everywhere” and “monitor everything” are not viable approaches and lead to cyber fatigue. With the rapid pace of digital transformation and adoption of cutting-edge technology, the promise of eliminating all risks sounds like wishful thinking. Such an approach leads to excess and ineffective spending, the inability to measure how much and how risk is reduced, and overwhelmed security teams with questionable progress.

As a result, there is a need to shift and advance a “risk-based” approach to cybersecurity. A risk-based approach seeks to decrease enterprise risk by identifying and focusing on the various elements of cyber risk. This is what risk management does; it allows business leaders to understand and then prioritize all components of cyber risks for targeted enterprise cybersecurity efforts.

To meet this objective, a risk management plan increasingly includes companies' processes for identifying and controlling threats to its digital assets, including proprietary corporate data, a customer's personally identifiable information (PII) and intellectual property.

Lack of a comprehensive risk management plan leads to indecision on managing and reducing business risks. The consequences can be catastrophic as criminals are eager to exploit gaps in risk management to launch their nefarious actions. A report by the Information Systems Security Association (ISSA) highlights that organizations were only fairly prepared to adapt to the challenges and risks brought by the pandemic and as a result, we witnessed a 63% increase in cyber-attacks. The disruption caused by cyber-attacks is quite costly – according to the IBM Cost of a Data Breach Report, the average total cost per breach amounts approximately to $3.86 million.

Benefits of a Risk Management Approach

The exploitation of uncontrolled risks by criminals will disrupt business processes, erode the trust customers place on organization, damage digital transformation initiatives and compromise privacy and data protection. Businesses need to exercise comprehensive risk management policies not only to protect themselves but also to sustain economic and social activities. Robust strategies to manage digital security risk are essential to:

  • Establish the trust needed for economic and social activities to fully benefit from digital innovation.
  • Implement the privacy principles and enhance privacy protection.

A risk-based approach to cybersecurity and privacy benefits organizations in many ways, including:

  • Designates risk reduction as the primary goal of the enterprise.
  • Prioritize investments based on a cyber program’s effectiveness in reducing risk.
  • Transforms the Board’s risk-reduction targets into measurable, realistic implementation programs with clear alignment from the board to the front line.

How the CGRC Certification Can Help You to Succeed

Board members should proactively manage cyber risk as a strategic issue. Cybersecurity risk management is a subset of operational risk management. Cyber risks may impact share value, mergers, pricing, reputation, culture, staff, information, process control, branding, technology, finance…

Therefore, companies will have to go through a risk assessment to identify their key information assets as well as their main vulnerabilities to cyber-attacks. Companies will have to responsibly allocate cyber risk management at every level of the organization and develop appropriate security policies supported by regular staff training. In essence, companies need to establish the right governance and policies, ensure that systems and processes are designed to defend against cyber threats by implementing the right security controls, and have the right mechanisms in place to identify when organizations have been compromised and how to respond and investigate when incidents happen.

To implement an effective risk management strategy, businesses can select from the many available cybersecurity and risk management frameworks, including:

  • NIST Cybersecurity Framework, which provides guidance “to better manage and reduce cybersecurity risk.”
  • ISO 27001, which is a that helps organizations “establish, implement, operate, monitor, review, maintain and continually improve an Information Security Management System.”
  • ISO 31000, an international standard for Risk Management that provides a set of principles to help organizations take a proactive approach to risks that they face.
  • COBIT, an IT management framework developed by ISACA to help businesses develop, organize, and implement strategies around information management and governance.

While these frameworks serve the same goal, reduce the overall business exposure to risks, selecting the one that matches the risk environment, and the internal processes and culture of an organization is the responsibility of a  Certified in Governance, Risk and Compliance (CGRC) A qualified CGRC professional possesses the foundational knowledge to select the most adequate risk management framework and determine whether the controls selected for implementation are enforced correctly, functioning as intended and delivering the desired outcome to comply with the security and privacy requirements pertinent to the organization.

Earning the CGRC certification is a proven way to build your career and demonstrate your expertise within various risk management frameworks. The CGRC shows employers you have the advanced technical skills and knowledge to understand Governance, Risk and Compliance (GRC) and can authorize and maintain information systems utilizing various risk management frameworks, as well as best practices, policies and procedures established by the cybersecurity experts at ISC2.