Integrated risk management (IRM) is a set of techniques and processes supported by a risk-aware culture and enabling technologies. Under the Gartner definition the IRM has a few attributes: to discover the full scope of risk organizations must develop a complete view across all business units and risk and compliance functions as well as key business partners, suppliers and audit. IRM is an integrated approach to how well an organization manages certain types of risk. Managing risk involves taking responsibility for the six IRM elements to get rid of the weaknesses and shortcomings.
By 2022, according to the Gartner Global Security Index, half of the world’s largest businesses will use Integrated Risk Management. IRM is designed to account for company-wide risks and help management make decisions at all levels of the organization. Traditional risk management techniques are ineffective in a changing environment when dealing with complex risk. The Integrated Risk Management market is around $8 billion.
The sheer complexity and volume of the risk landscape has made it harder for organizations to identify the relationship between different risk factors to make the appropriate risk management decision. Risk management activities can be futile and costly as efforts tend primarily towards risk mitigation without adding value to the organization. An Integrated Risk Management Framework provides an optimal Risk Control Strategy to create a coordinated approach for the evaluation, control and monitoring of risk within an organization. Risk management activities should be integrated throughout your organization in order to generate the optimal approach to assessing risk controls; for example evaluations of risk control strategies of your organization.
The need for technology and its application to address cyber concerns and geopolitical risks has moved away from being just another technical focus to become the highest priority board issue in global business considering business objectives and risk appetite of data exposure to third parties. But modern security tools do not provide enough for what business leaders are looking for, a risk management strategy. In the era of checkbox compliance, siloed teams were a viable approach to manage Cybersecurity & IT Risk programs. Now an industry is facing an explosion of technologies targeting nearly every potential unit of operation and team in the company. This is the ultimate reason why organizations need integrated risk management initiatives to ensure continuity and improved business performance and a proactive approach to risk monitoring.
Integrated risk management solutions
An integrated risk management framework is a detailed, systematic process for determining, assessing, and prioritizing risks before designing appropriate controls to reduce risks. The process of an IRM framework includes identifying the organization’s exposures-those situations or activities which can lead to loss depending on how they play out-the key stakeholders affected by the possible outcomes of these exposures-, and cost/benefit analyses for proposed solutions that are designed to mitigate identified risks.
A comprehensive list of criteria should be followed in order to have risk management be the focus without being the only issue addressed. These criteria include but are not limited to identify residual vulnerabilities based on data analysis, direct action taken by organizations within their risk management methodology (action taken prior to addressing identified vulnerabilities), mitigation measures.
A company’s operations must include a unified approach to risk management that involves a strategic combination of risk management techniques to address present and future risk challenges. It defined the sort of operational actions and functions used to manage risks, as well as responsibilities and reporting methods required to support the Risk Management process.
The operational actions and actions that are used to manage risks will be captured in the entire risk management policy and framework of the organization.
An integrated risk management framework must be able to look at the organization holistically and investigate risks, exposures, impacts, and vulnerability across all manageable elements (i.e., people, environment, products/services). The IRM approach spans traditional organizational boundaries because it is not sustainable for an organization to address only its own needs.
Multiple levels of thought must also be considered during an integrated view of effective governance of digital processes for organization’s security —for example, what will happen downstream if our product contains harmful chemicals? The increasing complexity of the planet’s problems means that organizations can’t solve them alone. Many business processes or goals overlap with other sectors; employees cross secure borders without concern; plants extract raw materials from outside sources…even customers can cause impacts far beyond their purchases.
Benefits of integrated risk management strategy
- An integrated risk management program addresses functional relationships between organizational, culture and strategic business goals thus an integrated view of enterprise-wide risks.
- Better protection for organizational governance process stakeholders facilitates communication so knowledge is more widespread and shared across teams which leads to building on every other member’s strengths while identifying any obstacles in real time.
- Improved preparedness by prioritizing the level of risk exposure required for a company to survive its environment successfully hence mitigate risk communication.
- Reduced operating costs through managing potential consequences from risk management processes from implementing an action plan to mitigate risk exposures. Resulting to added competitive advantage.
- Enhanced perception by stakeholders and analysts regarding the organization’s integrated risk management solution.
- The ability to track and analyze many risks simultaneously is crucial. Enterprise leaders need a clear view of all their risks so that they can prioritize them and take appropriate measures to manage them. The value of a program improves with integrated risk management since additional risk activities are shown. With dashboards, all risk categories should have centralized reporting options, and risk ownership assessment allowing business executives to understand how risk affects other aspects of the organization.
- Irm solution empowers decision-making in cybersecurity teams since security leaders will have controls technology to view risk in a dashboard.
- Risk managers and risk teams will undertake a risk assessment of operational risk,risk analysis, and risk awareness sessions to inform stakeholders i.e business units and processes supported for enabling technologies.
Implementing an integrated risk management approach within a risk aware culture organization
Implementing an integrated risk management approach within a risk aware culture organization will help you identify potential threats early on before they become a real problem. Identifying possible risks is good for the business as now you will know which areas you can improve on to make your organization more secure. The following approach is used to implement IRM.
- Develop Strategic – Operational Framework
This will be the approach your company will take for decision making, conduct risk audits, develop policies and procedures, assign personnel tasks for risks, do compliance reviews. Through achieving corporate alignment – Identify and prioritize risks across the company’s strategic, operational and financial objectives. Align human resources with business needs to mitigate or manage risk effectively. Evaluating risks through scenario analysis – Identifying possible threats and their potential impacts, as well as associated potential loss opportunities so management can determine how much attention is necessary to plans for each risk category on a day-to-day basis.
- Identify all business risks
Evaluate the company’s operational complexity, vulnerabilities, and organizational diversity to identify areas for potential risk. Start with easy stuff like everyday operations (working hours, etc.). Then expand outwards to include more complex processes (IT systems). Remember that this stage should be iterative so don’t give up if something doesn’t work like you thought it would at first.
For external risks, consider using the “SWOT” method (strengths, weaknesses, opportunities & threats) or PESTEL (political/legal/social/technological/environmental) analyses as well. Make a list of these for each part of your company like supply chain management or data security.
– Perform qualitative analysis to help rank or prioritize identified risks based on severity or probability.
- Integrating risk management into enterprise strategy and governance –
Developing appropriate governance processes and formalizing roles, responsibilities, and lines of communication within the organization so that the company considers all aspects in managing risks.”
Taking action with Integrated Risk Management
Each firm must employ some form of integrated risk management in today’s digital age. In today’s environment, governance, risk management, and regulatory silos are quickly dissipating. Most companies are now grappling with the changes brought on by the current wave of new solutions and platforms. To support this paradigm, security specialists must change and adopt new methodologies and frameworks.
Integrating risk management with the company’s other resources and knowledge centers is a necessary step so that you can identify what your risks are and how they affect your firm. When risks occur, it’s important to be prepared. Think of the earthquake in the US-those those who were prepared had buildings not collapse on them and could carry out their business as usual post-disaster because they knew what to do during and after such an event.
Being aware of possible risks will allow you to respond proactively instead of after something happens, which will minimize any impact losses may have on your bottom line. It’ll also give you time to develop plans for preventing or reducing these impacts through actions we take now–before disasters strike
How does Integrated Risk Management affect organizational success?
The standard method for risk management is made up of various risks being identified and handled by different specialists, who use various tools to fix the problem.The disadvantage of this method is that it lacks the added value provided by an organization, because the risk management procedure is conducted in silos, limiting the risk mitigation perspective. Through IRM integration, new Market Opportunities and Opportunities to Success will be generated.
A key element of any organization’s success is protecting the assets and resources that contribute to the financial well-being and sustainability of their business. Organizations can protect their assets by identifying risks and taking action before a disaster strikes.
Organizations need to protect themselves from threats like natural disasters, equipment breakdowns, an internal crime such as employee fraud or embezzlement, product quality problems, government regulations; all while working within strict regulatory compliance guidelines. Integrated Risk Management (IRM) is how they do it. IRM refers to an overall risk management strategy that utilizes prevention practices like “defense-in-depth,” which uses multiple measures in order to avoid damage and loss of life; while also using contingency planning practices like having backup systems.
Risk management vs governance risk and compliance
A risk management framework is built on establishing a proactive risk culture by considering risks in their proper context and developing outcome-relevant structures. The majority of GRC’s risk management techniques are focused on technical or operational crises.
The Enterprise Risk Management (ERM) approach widens the scope of a more comprehensive picture that includes potential benefits and strategic risks. While IRM is responsible for providing overall business strategy in terms of risks, GRC activities are the specific, more detailed operations that improve an industry’s risk profile and vary in breadth.
For a company, it is important that risks are seen in the context of business strategy and operations so they can be mitigated or eventually invented. The content you find on risk management will address this need for an integrated approach to risk identification and mitigation.
Integrated Risk Management (IRM) uses the best practices of finance, engineering, and project management to identify threats that could impact company value and then develop mitigating actions in advance before threats become problems that derail profitability. GRC starts with the assumption that any given attack must be taken seriously and includes personnel needs such as cyber security training, incident response plans, workflows for vulnerability assessments, etc. without taking into account what leverage attacks might have when aligned strategically.
Challenges involved in following an integrated risk management approach?
Many organizations have had difficulty in integrating risk management into their businesses.
- current information usually comes from “silos”, which are not integrated. This lack of integrated data provides an incomplete picture.
- it’s often difficult for organizations to keep up with the increasingly dynamic nature of risk management. It can be hard to anticipate new risks due to fast-moving external developments, uncertainty over what will happen tomorrow, organizational siloed functions, and conflicting internal views on what risks are most important at any given moment in time
- Lack of consistency in how companies define and measure risk.
- A key challenge in dealing with this is to create a system wherein each part works together to ensure the best possible results for your organization even though they may not be top priority individually or related temporally or spatially within your framework.
With the ever-changing landscape of business, it can be difficult to stay on top of what risks are most important for your organization at any given time. One way you can address this is by using Integrated Risk Management (IRM) practices that take into account all aspects of risk management in order to create a more comprehensive picture and mitigate or avoid damage before it occurs. IRM starts with an assessment of risks from various angles including finance, engineering, project management, etc.; which helps identify threats that could impact company value so they can develop mitigating actions in advance before those threats become problems. We hope our blog post has helped you learn about integrated risk management approaches as well as how they work together to provide better protection for an organization.