Integrated risk management (IRM) is an approach to managing information technology (IT) and operational risks that encompasses the entire organization and its external suppliers.
Gartner defines IRM as “a set of practices and processes, supported by a risk-aware culture and enabling technologies, that improves decision-making and performance through an integrated view of how well an organization manages its unique set of risks.”
IRM involves all business functions, including some not usually associated with risk management, such as human resources and public relations.
Although closely aligned with enterprise risk management, IRM is less about strategy (which ERM is supposed to support) and more about the hands-on work of managing risk, by implementing and monitoring controls at the system and technology level.
Cybersecurity risks that become incidents could disrupt critical business functions. Managing those risks has long been relegated to IT personnel, overseen by a chief information security officer (CISO). Audit and compliance staff have typically been involved in helping to assure that the enterprise conforms to regulations and industry standards that govern information security.
But as businesses increasingly become “digital-first,” many are taking a more holistic, integrated approach to managing the risks posed by cybercrime, such as data breaches, theft of intellectual property, and debilitating ransomware.
IRM does not only address cybersecurity, however. It considers every type of risk. For instance, in human resources, risk management controls such as background checks can catch an employee who falsified his or her resume. IRM helps you mitigate, avoid, or respond to these risks in a manner that protects your business.
What Are the Components of IRM?
There are six IRM components:
IRM begins with a risk management framework such as the National Institute of Standards and Technology’s Cybersecurity Framework (NIST CSF).
Creating an IRM strategy aligns your risk management activities with business objectives. Business performance is improved through effective governance and risk ownership. At this stage, you will create a risk profile summarizing risks to the organization and determining the level and types of risk your enterprise is willing to take (risk appetite).
Risk Identification and Assessment
The risk assessment process includes identifying existing and new risks, performing risk analysis, and prioritizing business risks based on the level of threat they pose. Taking an integrated view of risks across the business is vital in the integrated risk management process.
Deciding how to handle risks is next. Design a risk response that correlates to its priority level for each risk identified. Determine whether the risk response is to accept, avoid, or mitigate the risks, and then design the risk mitigation and prevention controls accordingly.
Communication and Reporting
Informing board members, investors, employees, and other stakeholders of strategies, plans, and responses to risks helps promote the risk-aware culture necessary for a truly integrated approach.
Do your controls work as they should, even across long periods of time? Effectively managing risk entails keeping a watchful eye on metrics and business processes to assure that those processes are followed as prescribed. Monitoring informs you if the organization is meeting its objectives regarding risk, and holds people accountable.
Using spreadsheets to manage and monitor risks isn’t sufficient in the digital age. Instead, enterprises are turning to specialized software solutions to manage governance, risk, and compliance (GRC) and enterprise risk management (ERM) more effectively. These tools enable alignment across an organization for a truly integrated risk management approach.
How Do You Implement IRM?
There are four fundamental steps to implement an integrated risk management program:
Align Your Cyber Strategy With Business Outcomes
The new role of the CISO is to act as a bridge between cybersecurity technical teams and stakeholders on the business side.
The critical step is to align cyber strategy and tactics with the business outcomes that executive management wants to achieve. This alignment shows business leaders that cybersecurity can enable the business, not hinder it.
Presenting the organization’s managed risks in a business context empowers non-IT executives and shares responsibility for securing the organization beyond technical stakeholders.
Facilitate a Risk-Aware and Risk-Engaged Culture
Any objective of changing an organization’s culture may appear complicated, but it can be done with focus and alignment. A risk-aware culture starts at the top, with business leaders communicating the importance to employees and stakeholders. It requires a mix of marketing and practical application to build visibility to risk management activities.
Include the Risks in Your Business Strategy
Effective risk management initiatives can result in corporate growth when risk management activities are aligned with business objectives. Ensuring business continuity and meeting compliance requirements are vital to both managing risk and maintaining business operations.
A company prepared for all types of risks is far more likely to thrive when disruptions occur.
Effectively Report on Your New Risk-Based Approach
It’s imperative to implement metrics to monitor your progress and then communicate that to stakeholders across the organization. Consistent metrics allow a clear view of the effect of risk management processes on strategic decisions and business operations.
Integrated risk management solutions and software help you automate these metrics by building templates and dashboards that you can review every month. An integrated view of all business units and functions will highlight early warnings of new risks and regulatory compliance concerns.
What Are the Benefits of IRM?
Here are some integrated risk management benefits.
- Increased range of opportunities. Integrated risk management strategies aim to consider the full range of possibilities associated with each aspect of the business strategy, rather than simply mitigating the negative factors. A more thorough assessment of each business outcome can lead to opportunities to leverage potential advantages.
- Identify risks at the strategic level. IRM helps create a more accurate risk analysis picture, from which organizational leaders make better decisions. Risks can be identified and effectively shared between business and IT departments.
- Ability to succeed through adversity. Organizations employing IRM-based plans will be better positioned to deal with unwanted events and adverse outcomes. They will incur fewer financial losses if proper responses are planned and resources are in place.
- Help companies create risk-aware cultures. A broad, cross-departmental risk management approach builds a stronger, risk-aware culture. Organizations will begin to view risk as a natural part of business strategy.
Create Your Integrated Risk Management Plan With ZenGRC
ZenGRC from Reciprocity has your IRM, ERM, and GRC solutions covered.
Instead of using spreadsheets, adopt ZenGRC to streamline your integrated risk management program. ZenGRC’s compliance, risk, and workflow management software is intuitive and simple to use.
Identifying vulnerabilities, managing policies and procedures, and helping to assure monitoring controls work as they should, ZenGRC supports your compliance requirements with a wide variety of frameworks.
Workflow management features offer easy tracking, automated reminders, and audit trails. The ZenConnect feature enables integration with popular tools, such as Jira, ServiceNow, and Slack, ensuring seamless adoption within your enterprise.
Insightful reporting and dashboards provide visibility to gaps and high-risk areas. By better understanding your risk landscape, you can take action to protect your business from cyberattacks, avoid costly data breaches, and monitor the security posture of your vendors.
ZenGRC is the most comprehensive solution available for fully integrated, holistic, enterprise-wide management of your organization’s risks.
Contact us today to schedule a demo and start on the path to worry-free governance, risk management, and compliance, the Zen way.