Risk awareness, mitigation, and management are integral to solid cybersecurity and business performance in the modern business climate.
Organizations need an active approach that supports risk-informed decision-making at every level to succeed at risk management. This is where integrated risk management comes into action.
The term “integrated risk management” (IRM), first coined by research group Gartner in 2017, refers to the set of practices and processes that gives your organization a single, consolidated view of all its risks. This visibility helps establish a common “risk language” so executives can understand how various risks interact, and then management can unify risk management practices.
Integrated risk management is often confused with governance, risk, and compliance (GRC). GRC has been around for many years; IRM is a newer paradigm. IRM provides a more effective way to manage business strategy across the entire enterprise, especially in today’s rapidly evolving cybersecurity landscape. GRC, as the name implies, is more geared toward addressing compliance risks.
Ultimately, IRM allows an organization to improve its security posture, support strategic decisions, and enhance performance.
This article explores integrated risk management and its benefits. It contrasts IRM and GRC, so organizations can understand the differences and make better risk management and mitigation decisions.
What Are the Benefits of Integrated Risk Management?
Every modern organization faces operational risks from numerous directions: geopolitical, compliance, digital, cybersecurity, and third party. A robust risk assessment framework helps your business navigate this risk landscape efficiently and effectively.
When a business pursues integrated risk management instead of a purely compliance-based strategy, it can develop a more realistic and complete picture of the risk landscape. That greater visibility enhances the company’s risk identification and management capabilities.
Executives can also improve their understanding of risk linkages and dependencies. For example, they can better see how one type of risk (say, operational) might affect cybersecurity, business performance, and stakeholder relationships.
IRM is an enterprise-wide endeavor; it involves IT, other management functions, and the operating business units. These connections allow management to evaluate risks in the broader context of the organization’s objectives and business strategy.
An IRM-driven strategy can also improve risk communication and collaboration, so that senior executives allocate appropriate resources and responses to deal with threats and minimize harm.
Integrated risk management software plays a vital role in helping to create a risk-aware culture across the organization, because that software can communicate what the risks are, clearly and precisely, for all employees. Better technology allows you to see how risks might affect various parts of the business.
Finally, since considerations about strategy and risk are fundamental to IRM, this approach helps leaders to evaluate both the opportunities and downsides associated with a particular plan. A more holistic evaluation increases the odds that management will be able to seize opportunities rather than be mired in challenges.
(Here’s another resource to learn more about the benefits of integrated risk management.)
GRC Tools and Integrated Risk Management Framework
GRC and integrated risk management address similar areas of cybersecurity; they just differ in scope and take different approaches. IRM is driven by business strategy and objectives, whereas GRC is driven much more by compliance obligations.
GRC solutions are modular and focus primarily on running through a checklist for compliance-related activities. Plus, GRC teams often operate in independent silos.
That approach might have sufficed in the past, but it’s no longer fit for purpose given the proliferation of digital technology. Online tools have created more risks for organizations, which can manifest in more ways. Hence information security leaders now consider an IRM strategy vital in today’s cybersecurity landscape.
IRM solutions focus on risk management to implement cybersecurity best practices for companies, including governance and regulatory requirements, through actionable insights aligned with business strategies. Moreover, responsibility for this integrated approach is shared throughout the organization. Unlike GRC, an IRM program has a broader mandate and focus, including business strategy and specific tactics to identify, manage, and mitigate risks.
Key Capabilities and Attributes of IRM Solutions
Since integrated risk management is enterprise-wide and affects the organization’s cybersecurity posture and decision-making, IRM solutions need several capabilities.
Enterprise Risk Management
The tool must leverage standard risk assessment methodologies and frameworks to bring consistency to an organization’s assessment, prioritization, management, and control of risks.
It must support the creation of robust compliance policies, assessments, and procedures to build a strong compliance culture.
Business Strategy Support
The framework must support the business strategy and establish effective governance and risk ownership for performance improvement.
Communication and Reporting
Stakeholders should understand, track, and audit the organization’s risk assessment and response through updated metrics, visuals, and reports.
Governance and Risk Monitoring
The IRM solution should enable risk managers to set governance objectives, assign risk ownership and accountability, and track policy compliance.
Third-Party Risk Management
The enterprise should be able to monitor, manage, and mitigate third-party risk continuously.
For a more detailed discussion of the various components, see our post on the elements of an integrated risk management system.
How to Use Automation for Integrated Risk Management
For the foreseeable future, managing and administering risk assessments will still require a fair bit of human intervention. That said, automation is essential to facilitate efficiencies and avoid manual, repetitive, and wasteful operations.
Thankfully, it’s now possible to use software solutions with pre-built frameworks for deployment in a matter of minutes rather than weeks or months. In addition, the solution itself can streamline data gathering automatically from your network tools, while correlating control validation and adding additional layers of external threat intelligence.
A risk and compliance management platform can automatically give you ratings, reports, and visualizations of the risks after the data has been collected, as well as suggestions for additional initiatives to close gaps and remediate issues. As a result, you can automate tasks that would otherwise take 90 percent of the time, and redirect that effort to strengthen your corporate cybersecurity.
Which Metrics Can Be Used to Measure IRM Efficacy?
Enterprises can’t determine whether they have accomplished their risk management goals without risk measurements. Metrics help determine whether risk management activities or initiatives have decreased or increased risk exposure. Metrics also allow more precise thresholds for when a risk response is required, which improves escalation and notification mechanisms.
The following are the main advantages of metrics:
- Provides constant visibility into the effectiveness of risk and control measures
- Sends notifications to relevant owners when risk and control performance change
- Automates the procedures involved in gathering metrics, saving time for management
- Information about risks is effectively shared and monitored throughout the company
Types of Metrics
Key Risk Indicators (KRIs)
These measures show exposure to a particular risk or group of hazards. Examples of KRIs include:
- The quantity of IT hacking attempts
- The number of harmful social media posts that occur after a loss occurs
- Employee surveys to measure staff morale
Key Control Indicators (KCIs)
These indicators show the effectiveness of controls for managing risks. KCIs are designed to identify when and how often business activities deviate from procedural and compliance requirements.
Key Performance Indicators (KPIs)
KPIs demonstrate the accomplishment of business goals. Each business unit monitors KPIs to track how well it is or isn’t achieving targets to meet the business strategy.
Fortify Your Corporate Cybersecurity with Reciprocity ZenRisk
Reciprocity’s ZenRisk platform equips organizations and risk managers with a single, centralized tool for a comprehensive, integrated risk management program.
ZenRisk provides greater visibility to manage information security risks and vulnerabilities so that you can close the gaps on risk and compliance requirements. Continuous risk monitoring with real-time updates and intuitive dashboards enables a robust risk management plan. Optimize resources and streamline workflows with advanced automation and prioritization features.
Schedule a demo to see how ZenRisk can drive more effective risk management in your organization.