Enterprise risk management technology does not function as a central platform for the enterprise and requires integration throughout. It means that it is necessary to deploy integration capabilities throughout the enterprise to keep pace with destructive cyberattacks and other risks that emerge at all levels across an organization. Companies need to understand how they can integrate ERM strategies into their processes and how different methods of ERM affect fundamental business interactions such as organizational culture, compliance controls & strategy development, human resources recruitment practices, and investment allocation to manage risk.
Enterprise risk management gives a competitive edge to a firm. Implementing the right technology to manage enterprise risk will help you stay ahead of your competition and maintain profitability. It’s important to choose the right ERM software for your organization. It is the key to managing all of your risks efficiently. This blog post will discuss how ERM software can help you with data analytics to compliance reporting. A firm erm program needs to have end-user computing training for risk and compliance with cybersecurity threats. During erm strategy setting components of technology strategic goals and artificial intelligence regulatory expectations in the enterprise level for the guidance provided.
Technology is changing how we work in countless ways, and different departments are finding new ways to use it every day. As a risk management professional, you may have been wondering how best to integrate technology into your job.
Risk management practices in technology risk management encompass the identification, analysis, and mitigation of risk that may affect information technology (IT) investments.
An organization’s mindset while managing technology risk management needs to be focused on cybersecurity to avoid cyberattacks. To do this, there must be an understanding of how attacks happen, who may attack your network, and what they want; cybercrime trends; system vulnerabilities; cognition; detection technologies; policies for prevention or limiting damages from cyberattacks.
It is important to protect against potential threats like DDoS attacks using mitigation strategies like firewalls. It should also include access policy management to limit unauthorized users’ access, training staff on general precautions required in dealing with sensitive IT data or systems that process such data, and finally, incident response plans ability.
Technology risk professionals identify, mitigate, and monitor technology risks in conjunction with risk managers and participate in risk management activities. The responsibility for this falls under what is known as business continuity management, which includes disaster recovery planning and production of technologies that allow for the continuation of a business where new products will be lost due to an unforeseen event or damage from natural or man-made disasters.
Technology risks happening may impede the compliance management activities of an organization and need to be commensurate with the organization’s risk appetite and operational risk framework. Risk appetite is set by the board and guides all risk events activities of the firm. Example management accountants will use the risk data from operational risk software to analyze the cost of production of a product.
Risk Information Enabler
As analytics technologies become more popular and widespread, data collection has traditionally been put in the hands of risk analysts. Risk analysts may download data without indexes but sometimes solve problems by developing translation tables and formulas and importing data from record management’ Risk analysis tools sometimes also require mapping, which is challenging to aggregate data across multiple risk domains.
The business analysis system’s strategic importance should now finally receive the board’s attention. It was primarily the role of a technological risk management professional to use such tools and techniques to protect a process of data analysis. The risk data will also be important to internal auditors whose organizations rely on customer data to oversee vendor management practices and ultimately be used by financial executives for financial performance.
As analytics technologies become more popular and widespread, data collection has traditionally been put in the hands of risk analysts. An organization’s mindset while managing technology needs to be focused on cybersecurity to avoid cyberattacks. To do this, there must be an understanding of how attacks happen, who may attack your network, and what they want; cybercrime trends; system vulnerabilities; security cognition; detection technologies; policies for prevention or limiting damages from cyberattacks.
It is important to protect against potential threats like DDoS attacks using mitigation strategies like firewalls. It should also include access policy management to limit unauthorized users’ access, training staff on general precautions required in dealing with sensitive IT data or systems that process such data, and finally, incident response plans/Chief risk officer.
Technology risk professionals identify, mitigate, and monitor technology risks in conjunction with risk managers and participate in risk management activities. The responsibility for this falls under what is known as business continuity management, which includes disaster recovery planning and the production of technologies that allow for the continuation of business operations in the event of an interruption. These technologies are often referred to as high availability, disaster recovery, or continuity of operations.
Manage Risk Approaches and Methods
Each approach is specific to the organization it is working in and the geographical locations in which it operates. Various modes of ERM exist, but the methodologies mainly overlap among organizations or sectors. Practices range from risks and control links to procedures workflows strategy and objective linkage, bespoke assessments governance/policy management, action and issue management, dashboard and metric monitoring and reporting.
In the era of the emergence of shopper-centric management procedures, there may be many advantages, including improved compliance and efficiency in GRC’s ability to manage the new business opportunities- whatever their method. It, therefore, needs neither an extremely flexible nor an unprofitable solution.
Many C-level executives consider GRC as too complicated to implement. When asked to write down their approach, they cannot explain how they have implemented the framework within the organization. Many describe it as being embedded into other management processes or being aligned with different organizational ways. Executives and boards will appreciate a snapshot of all the organization risks from some specific areas, such as financial exposure.
In some sectors and operational contexts, organizations have developed risk management processes that are sufficiently flexible to enable a certain degree of customization. However, managing risks in a more or less a standard practice can be challenging to define in the GRC framework. For this reason, many organizations try to keep GRC as a top priority to be involved.
Address Stakeholder Needs
The ERM uses visual indicators to determine risk profiles for an organization and to quantify its risk profile. The ERM provides strategies that drive business opportunities that reduce the chances and/or severity of events affecting the economy and optimize resources to guide planning and design. When managing risk across functionalities, including financial, compliance risks management, and internal audit, efforts can align to ensure, e.g., accounting and reporting systems reflect accurate and consistent information on risks. It requires a scalable and resilient framework that includes data from threats and is scalable to meet functional business and other stakeholder requirements.
Efficient, effective risk management involves technology that can be scalable across the organization. A risk management solution that is sustainable includes support for business continuity planning (BCP). BCP provides strategies for managing risks that affect the organization’s information technology (IT) systems, data sources, and applications. Organizational risk management has become an essential driver of enterprise risk management (ERM) solutions, as organizations seek to improve the quality of their risk decisions. Properly understood, this is a case in point where improved business processes can improve the outcomes of information technology (IT) systems in an organization.
COSO(Committee of sponsoring organizations) ERM framework encourages continuous process improvement that relies heavily on governance structures to support decision-making. Both frameworks deal with objective setting risk prioritization and leverage of information systems. Technology strategy planning often has low-level objectives such as IT migrations, strategy for people relocation, cost reduction, and timelines reduction.
The key to effective design is to accept that ERM aspects are understood at the board levels and to leverage the strengths of the board-level ERM program within the organization. Cybersecurity attacks and related technology issues dominate the minds of board members today. As IT markets grow more complex, boards are expected to have basic knowledge of technical problems. Board-level ERM programs can address cybersecurity by providing primary education on common vulnerabilities and best practices associated with their existence in board reports.
Board reports have traditionally covered the six COSO ERM sponsoring organizations components leading to a more effective educational content design that does not duplicate the COSO ERM framework and is relevant to board members. For example, board reports could include a consolidated list of known vulnerabilities and recommendations on best practices to mitigate them:
- Data aggregation and maintenance – Redundancy and duplication of data storage and backup processes
- Access controls – Security levels associated with data and information access;
- Business Continuity – Extent of planning and availability of alternative processing sites;
- Information security – Vulnerabilities associated with the primary use of operating systems, network infrastructure, application layers
- System development/change controls – Access to source code, identification of issues during implementation or upgrade, policies on software upgrades implementation;
- Security awareness training – Extent to which personnel are familiar with risks associated with cyber-attacks and risk events and know how to avoid them.
This approach leverages the full strength of the board-level ERM framework while reducing duplication that often occurs when educational and training programs are developed without a unifying framework in business units.
Challenges Facing Management
The publication of the revised COSO-ERM framework, Enterprise Risk Management Integrated Framework, can not have been more timely. Executive management cannot now focus on IT risks from an IT department silo. It requires an integrated management strategy.
IT security is of particular concern today because more and more of the world’s business IT infrastructure is being run on cloud platforms. Cloud computing enables companies to deliver new revenue-generating services faster, improve operational efficiency by consolidating data centers, reduce costs by eliminating expensive hardware upgrades, and provide access to leading technologies anywhere in the world. But it also brings new IT challenges.
Cloud-related issues are often not recognized initially, but they come to prominence when something goes wrong.
Risk and compliance are important concepts for many companies, but they can be challenging to manage. The American Accounting Association offers guidance on how best practices should work in your company or organization with their comprehensive set of standards designed by certified public accountants who understand what challenges businesses face when managing riskier transactions like international settlements. Risk and compliance can improve customer experience. It is because they both affect your company’s bottom line, but there can be positive ones as well! The National Institute for Accounting has many resources available to help accountants stay up-to-date with all their risks while also maintaining compliant standards of conduct
COSO ERM and COBIT 5 frameworks represent a comprehensive and common knowledge community that experts hold throughout the globe. Technology and cybersecurity risk-and-resolution professionals should be conversant with both frameworks and be familiar with these integration touchpoints.
The technology strategic plans are expected to conform to the enterprise’s mission vision and base principles as reported by authors of the books COSO Risk and Cybersecurity” and Cybersecurity Risk.
The strategic cybersecurity plan must be consistent with the enterprise’s risk management strategy and its mission and goals. Technologies mature over time, so technology integration touchpoints should be monitored to keep pace with rapidly changing business conditions.
Managing risk solutions
An example of risk solutions is the BWise risk management system, which helps organizations manage and sustain an ERM system with its GRC Platform. BWise possesses the capabilities to support a comprehensive range of risk management practices from policy design to Risk analysis to Issue and Action Management to KPI creation and monitoring loss & damage protection and risk. BWise’s GRC Platform enables organizations to align strategic objectives with business operations. The platform’s robust approach to enterprise risk management is designed for efficiency, scalability, and accuracy.
The modular and flexible platform architecture enables organizations to integrate internal audit, risk management, compliance, and governance practices. Technology that will adapt as your organization adjusts contributes to the development of value. It has been shown to lead to increased EBITDA (Source EY, Turning Risk Into Performance. )
ERM creates a central repository of data for information transparency
When data is stored in isolation, it doesn’t generally get shared, and it usually doesn’t get appropriately shared. This technology helps consolidate disparate data from across enterprises. All stakeholders can understand all risks through one platform and efficiently evaluate and examine risks from the exact location.
By consolidating this information into a secure, centralized application, companies can better understand their particular business’s specific risks. It also ensures that all stakeholders are on the same page regarding risk management strategies. It means critical information is no longer siloed across databases or in binders stashed away on shelves throughout different departments.
Can enterprise risk management technology and its tools be utilized in enterprise risk management?
Yes. ERM software for small to medium-sized businesses implements risk assessment tools that can be used for this very purpose.
This software facilitates the following tasks:
• Risks identification and acquisition of relevant data
• Risk mitigation plan design and implementation
ERM software provides an overall risk picture that should contribute to firm success in a competitive knowledge-based economy. This type of application explicitly addresses two main objectives: 1) preventing tomorrow’s disasters and 2) mitigating the downside financial consequences of today’s mistakes. Overall, ERM applications should help build strong management teams that are transparent about their risks as well as good corporate citizens.
What does Enterprise risk management do?
Enterprise risk management is the responsibility of an organization’s Chief Risk Officer (CRO) to assess and monitor its organizational, operational, financial, compliance, market, legal, and regulatory risks. It ensures that all risks are identified within the firm to take proactive actions to ensure safety for both employees and customers.
Risk management can include identifying factors that could lead to violence in schools or public places. Standard practices would continually inspect their facilities for any toxic substances or significant safety hazards while working on projects with necessary safety precautions in place. They also analyze current known threats of attacks by looking at things like social media activity or world events for alerts about what may happen next based on what has already happened elsewhere in the world.
What are the five types of risk management?
The five types of risk management are:
-Transferring risk by way of insurance and other financial instruments,
-Contingency planning and crisis management (this is sometimes classified as a means to avoid or minimize the effect of future risk), and
-Risk mitigation. Risk Management should be an important consideration in every venture because it will protect your business. It should be taken into account before there are any significant repercussions you never anticipated happening. The five types help organizations become more focused on their objectives while reducing the uncertainty factor, which would otherwise cause havoc.
What is enterprise risk management in cyber security?
In cybersecurity, enterprise risk management is the proactive planning and execution of policies, procedures, governance, and technologies. It controls to help mitigate the vulnerabilities that could potentially impact your firm or data.
Cyber security risk management can refer to any actions taken by an individual or company to protect their various types of “assets”, which are often categorized as physical assets (things), people with access to those assets (human capital), data-in-motion (mobile devices) or data at rest (servers). All these different elements need protection from cyber threats. That’s when you hear about enterprise-level cyber security systems designed with defense in mind.
Integrating ERM technology throughout the enterprise is key to staying ahead of cyberattacks. But how do you know which ERM strategy will work best for your company?
Chris Ekai is a Risk Management expert with over 10 years of experience in the field. He has a Master’s degree in Risk Management from University of Portsmouth and is a CPA and Finance professional. He currently works as a Content Manager at Risk Publishing, writing about Enterprise Risk Management, Business Continuity Management and Project Management.