Data published by Statistica found that cybersecurity incidents were the leading risk factor facing organizations worldwide heading into 2022.
Every organization is susceptible to some level of risk. Whether those risks are natural disasters, human errors, or cyberattacks, these hazards pose an immediate threat to day to day operations. More importantly, they magnify the importance of risk management.
In this article, we'll take a closer look at the risk management process, what it entails, and how to plan it with maximum efficiency.
What’s in a Risk Management Process?
A risk management process is designed to help an organization determine what could go wrong, anticipate the potential outcomes of those events, and create strategies to keep them in check. It can be an exhaustive undertaking as risk events come in all shapes and sizes.
A properly structured risk management framework can uncover potentially crippling nuisances that pose a threat to mission-critical functions. It can also drive solutions that help strengthen business continuity and resilience.
An effective risk management process offers a litany of benefits, such as:
- Anticipating potential risks and events that could compromise business operations
- Extracting actionable insights that lead to smarter decisions and faster risk response efforts
- Clearly defining objectives that drive more efficient spending and resource allocation
- Helping save time and effort by focusing on problem areas that have been predetermined by priority
- Improving security, operational efficiency, and business contingency plans
Risk Management Process Blueprint
In general, the primary goal of a risk management plan is to isolate and evaluate risks on an individual scale. That means giving priority to those that are most likely to happen, making changes that have the greatest potential impact, and taking necessary measures to address them.
While entirely eliminating all risks is unrealistic, it is possible to minimize their impact. Here are the fundamental steps of the risk management process:
Risks can be classified in categories such as operational, financial, or legal liability. You essentially want to consider any event or element that could hinder your organization from functioning at full speed.
Each identified risk should be detailed as thoroughly as possible and recorded in a risk register. This database will help key stakeholders learn from past programs and lead to better decision-making moving forward.
Not all risks are created equal. Take information technology, for example. The functionality hiccups caused by a software glitch might be considered a minor inconvenience. On the other hand, the vulnerabilities that exist within outdated software could lead to a security breach that brings business operations to a standstill.
Risk analysis entails dissecting each individual risk to find the specifics of the problem and further issues that might occur if left unresolved. This leg of the risk management process should focus on drawing a line between potential dangers and the factors that could trigger them. It'll give you a better idea of where the weak spots exist within your organization, and the severity of the underlying vulnerabilities.
Once you understand the impact, you can better anticipate the outcome of a worst-case scenario by prioritizing risks based on predetermined significance. The risks deemed as minor hassles will be given low-level priority, while any concerns that could result in substantial damage would rank as high risks.
Prioritization can be helped by making honest assessments about your risk exposure. Some companies are confident in their ability to manage many risks. Others would prefer to eliminate as many as reasonably possible. The right balance will ultimately be determined by the type of risks, the impact of the risks, and the volume of risks you feel comfortable managing.
To assign priority to risks, it’s important to understand the difference between risk priority and risk severity.
Severity speaks to the impact of a given risk. For instance, a risk could either prevent a single employee from performing a specific task, or compromise an entire network of systems.
Priority speaks to the urgency and overall importance of a given risk. It essentially dictates how fast you need to move and where you should focus your risk response efforts first.
In some cases, severity and priority align. Maybe it's the lack of encryption exposing sensitive information to hackers. Or perhaps an outdated plugin leaving the company website vulnerable to a database exploit. Either example represents severe consequences that would likely warrant high priority from security teams and key decision makers.
The risk management strategy is not complete without a plan to address the problems that have been uncovered in your risk assessments. Again, the proper course of action is dependent on the risk and the severity of the potential impact. As such, a risk treatment strategy might call for one or more of the following actions:
- Risk avoidance: Eliminating activities or vulnerabilities that correlate to identified risks
- Risk mitigation: Minimizing the impact of events triggered by risks, or the likelihood that they occur at all
- Risk retention: Accepting the fact that while certain risks can't be avoided, the impact can be managed without compromising business objectives
- Risk transfer: Sharing or transferring risks to an insurance company or service provider that agrees to cover the costs of managing the impact
Actions aside, a risk response strategy should be structured to prioritize risks that could inflict the most negative impact. This aspect of the risk management process typically becomes more streamlined as you glean insights from past projects and learn to better anticipate potential threats.
Ongoing Risk Management
Risk management is not a one-time process. You can incorporate ongoing risk monitoring and response strategy effectiveness evaluations into your project management process. This commitment will ensure that identified risks have been properly assessed and the right measures have been implemented to address them. More importantly, it will help you improve business continuity as you fine-tune the risk management process over time.
When it comes to managing risk exposure, it pays to plan beyond the basic steps of the risk management process. Technology has made it possible to more quickly identify risks, vulnerabilities and potential threats, in turn, prompting more immediate, more effective risk response strategies.
Advancements in automation, data analytics, and threat detection are driving smarter business decisions, while helping firms uncover new risks and business opportunities alike.
Risk Management With ThreatKey
ThreatKey is here to take the hassle out of the risk management process. Our fully automated platform performs comprehensive analysis across your virtual and cloud environments, helping organizations take a proactive approach to risk management and remediation.
As a result, our customers are positioned to maintain a superior level of flexibility and adaptability that aligns with the most stringent security, compliance, and business objectives.
Make Risk Management a Priority
A comprehensive risk management process should be a fixture in your organizational structure. Although you can’t prevent every threat from happening, having a solid risk management process can ensure you're better equipped to handle whatever potentially disruptive events may come your way.
ThreatKey adds a much-needed touch of simplicity to the risk management process. We use state-of-the-art automation to improve accuracy and speed, so we can identify risks in real time with unparalleled visibility across your SaaS environment.
Contact us today to schedule a custom demo.
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