Risk management is critical for business stability and continuity. Risk management is the practice of proactively identifying the risks your organization faces and taking steps to address them. A thorough risk management strategy ensures your organization is considering confidentiality, integrity, and availability as it relates to security, legal, compliance, and financial risks throughout the organization’s operations.
Why is risk management important?
There are many types of risks that could harm your business, some of which come with serious repercussions, such as:
- A data breach that results in the loss of your data and proprietary information
- Fraud claims or other financial risks that could be costly
- Loss of trust for your brand’s reputation, which could impact your revenue and customer retention
- An outage that prevents essential business operations
An effective risk management program puts steps in place to monitor and mitigate the risks your business faces. It should consider risks like financial uncertainties, strategic management errors, compliance gaps, technology issues, and natural disasters.
{{cta_withimage4="/cta-modules"}}
5 steps of risk management
While organizations can develop their own process for risk management, ISO 27001 is a widely accepted security standard for implementing a risk management program. ISO 27001 defines five distinct risk management steps:
1. Identify risks
Create a comprehensive list of all the risks your organization faces. This should include:
- Data security and integrity risks
- Financial risks
- Legal risks
- Risks to your intellectual property
- Physical risks to your facility and equipment
- Risks to your brand reputation
Collaborate with the necessary teams during this process to understand the different types of risk scenarios your organization faces and their potential impact.
2. Risk assessment
Now examine each risk scenario you identified by rating each risk based on how likely it is that the risk will occur and the severity of its impact if it did. For example, the likelihood of a bad actor hacking an IT employee’s password may be low, but its impact would be high given they would gain access to critical systems and data. When scoring your risks, give a rating for both impact and likelihood using either low, medium, or high.
3. Risk prioritization
Once you’ve determined the impact and likelihood of each risk, you can prioritize which to take action on first. Start on the risks with a high likelihood and high impact scores, then those that have medium likelihood and high impact or vice versa. Work your way down to risks with lower scores for both impact and likelihood.
4. Risk mitigation and implementation
Now it’s time to take action. Start from the top of your list and determine the best ways to reduce its likelihood and impact. There are typically four options for risk handling:
- Acceptance: Determining that the potential harm is minimal enough that your organization can reasonably tolerate this risk should it occur.
- Avoidance: Deciding that the risk is so high that you would want to avoid it altogether. This would look like canceling contracts with high-risk vendors or eliminating high-risk processes.
- Risk transfer: Outsourcing the risk by hiring a third party to mitigate it. An example of this would be storing your data in an external data center rather than using your own servers.
- Risk mitigation: Creating controls or policies that minimize the likelihood or impact of a risk. An example of this would be implementing access management protocols internally.
5. Control monitoring
Once you have a strategy in place for each of your identified risks, you’ll need to continuously monitor those controls and strategies. Establish metrics to determine how your risk management controls are working and create a process for identifying new risks and changes to existing ones. As new changes and risks arise, follow the risk management cycle to assess, prioritize, mitigate, and monitor them.
Best practices for implementing a risk management plan
Follow these best practices for implementing a risk management program:
- Consider the big picture: As you develop your risk management strategy, think about your organization’s objectives and which risks could impact those goals. As objectives shift, re-evaluate your risk strategy and adjust accordingly.
- Collaborate with stakeholders: It’s important to get a holistic view of your risks, which requires you to work with the teams closest to those risks. Engage your finance team to understand your financial risks, your IT team to understand your data security risks, and so on.
- Demonstrate your risk posture: An effective risk management plan can help you gain and maintain the trust of prospects, which can impact your revenue. Figure out a way to demonstrate your risk strategy to earn trust while keeping your specific controls confidential.
- Build a risk culture: Your senior leaders should integrate a culture of minimizing risks throughout the organization and communicate that every department and employee plays a role in this process.
- Enable continuous monitoring: Risk management isn’t just a point-in-time activity. Enable systems and processes to consistently re-evaluate the status of each risk on an ongoing basis. This often involves getting a tool that enables continuous risk monitoring to keep your business secure beyond your typical point-in-time risk assessment.
Use Vanta’s Risk Management solution to simplify the risk assessment process and streamline the steps needed to remediate risk for continuous, proactive risk reduction. The Vanta platform simplifies and automates SaaS-based risk assessments, eliminating the need for countless spreadsheets and endless email threads with internal teams and auditors.
To learn more about Vanta’s Risk Management solution, take a tour or request a demo.
{{cta_testimonial6="/cta-modules"}}
Risk
What is risk management?
Risk
Risk management is critical for business stability and continuity. Risk management is the practice of proactively identifying the risks your organization faces and taking steps to address them. A thorough risk management strategy ensures your organization is considering confidentiality, integrity, and availability as it relates to security, legal, compliance, and financial risks throughout the organization’s operations.
Why is risk management important?
There are many types of risks that could harm your business, some of which come with serious repercussions, such as:
- A data breach that results in the loss of your data and proprietary information
- Fraud claims or other financial risks that could be costly
- Loss of trust for your brand’s reputation, which could impact your revenue and customer retention
- An outage that prevents essential business operations
An effective risk management program puts steps in place to monitor and mitigate the risks your business faces. It should consider risks like financial uncertainties, strategic management errors, compliance gaps, technology issues, and natural disasters.
{{cta_withimage4="/cta-modules"}}
5 steps of risk management
While organizations can develop their own process for risk management, ISO 27001 is a widely accepted security standard for implementing a risk management program. ISO 27001 defines five distinct risk management steps:
1. Identify risks
Create a comprehensive list of all the risks your organization faces. This should include:
- Data security and integrity risks
- Financial risks
- Legal risks
- Risks to your intellectual property
- Physical risks to your facility and equipment
- Risks to your brand reputation
Collaborate with the necessary teams during this process to understand the different types of risk scenarios your organization faces and their potential impact.
2. Risk assessment
Now examine each risk scenario you identified by rating each risk based on how likely it is that the risk will occur and the severity of its impact if it did. For example, the likelihood of a bad actor hacking an IT employee’s password may be low, but its impact would be high given they would gain access to critical systems and data. When scoring your risks, give a rating for both impact and likelihood using either low, medium, or high.
3. Risk prioritization
Once you’ve determined the impact and likelihood of each risk, you can prioritize which to take action on first. Start on the risks with a high likelihood and high impact scores, then those that have medium likelihood and high impact or vice versa. Work your way down to risks with lower scores for both impact and likelihood.
4. Risk mitigation and implementation
Now it’s time to take action. Start from the top of your list and determine the best ways to reduce its likelihood and impact. There are typically four options for risk handling:
- Acceptance: Determining that the potential harm is minimal enough that your organization can reasonably tolerate this risk should it occur.
- Avoidance: Deciding that the risk is so high that you would want to avoid it altogether. This would look like canceling contracts with high-risk vendors or eliminating high-risk processes.
- Risk transfer: Outsourcing the risk by hiring a third party to mitigate it. An example of this would be storing your data in an external data center rather than using your own servers.
- Risk mitigation: Creating controls or policies that minimize the likelihood or impact of a risk. An example of this would be implementing access management protocols internally.
5. Control monitoring
Once you have a strategy in place for each of your identified risks, you’ll need to continuously monitor those controls and strategies. Establish metrics to determine how your risk management controls are working and create a process for identifying new risks and changes to existing ones. As new changes and risks arise, follow the risk management cycle to assess, prioritize, mitigate, and monitor them.
Best practices for implementing a risk management plan
Follow these best practices for implementing a risk management program:
- Consider the big picture: As you develop your risk management strategy, think about your organization’s objectives and which risks could impact those goals. As objectives shift, re-evaluate your risk strategy and adjust accordingly.
- Collaborate with stakeholders: It’s important to get a holistic view of your risks, which requires you to work with the teams closest to those risks. Engage your finance team to understand your financial risks, your IT team to understand your data security risks, and so on.
- Demonstrate your risk posture: An effective risk management plan can help you gain and maintain the trust of prospects, which can impact your revenue. Figure out a way to demonstrate your risk strategy to earn trust while keeping your specific controls confidential.
- Build a risk culture: Your senior leaders should integrate a culture of minimizing risks throughout the organization and communicate that every department and employee plays a role in this process.
- Enable continuous monitoring: Risk management isn’t just a point-in-time activity. Enable systems and processes to consistently re-evaluate the status of each risk on an ongoing basis. This often involves getting a tool that enables continuous risk monitoring to keep your business secure beyond your typical point-in-time risk assessment.
Use Vanta’s Risk Management solution to simplify the risk assessment process and streamline the steps needed to remediate risk for continuous, proactive risk reduction. The Vanta platform simplifies and automates SaaS-based risk assessments, eliminating the need for countless spreadsheets and endless email threads with internal teams and auditors.
To learn more about Vanta’s Risk Management solution, take a tour or request a demo.
{{cta_testimonial6="/cta-modules"}}
How to manage risk with Vanta
Learn how to get thorough risk assessments while also making the process easier to manage.
How to manage risk with Vanta
Learn how to get thorough risk assessments while also making the process easier to manage.
How to manage risk with Vanta
Learn how to get thorough risk assessments while also making the process easier to manage.
Vanta gives us broad visibility across our business. We are immediately alerted to any critical vulnerabilities so we can deal with them straight away. It’s a single pane of glass for us.”
Nathan Miller, Head of Information Security & Compliance | Dovetail
| Role: | GRC responsibilities: |
|---|---|
| Board of directors | Central to the overarching GRC strategy, this group sets the direction for the compliance strategy. They determine which standards and regulations are necessary for compliance and align the GRC strategy with business objectives. |
| Chief financial officer | Primary responsibility for the success of the GRC program and for reporting results to the board. |
| Operations managers from relevant departments | This group owns processes. They are responsible for the success and direction of risk management and compliance within their departments. |
| Representatives from relevant departments | These are the activity owners. These team members are responsible for carrying out specific compliance and risk management tasks within their departments and for integrating these tasks into their workflows. |
| Contract managers from relevant department | These team members are responsible for managing interactions with vendors and other third parties in their department to ensure all risk management and compliance measures are being taken. |
| Chief information security officer (CISO) | Defines the organization’s information security policy, designs risk and vulnerability assessments, and develops information security policies. |
| Data protection officer (DPO) or legal counsel | Develops goals for data privacy based on legal regulations and other compliance needs, designs and implements privacy policies and practices, and assesses these practices for effectiveness. |
| GRC lead | Responsible for overseeing the execution of the GRC program in collaboration with the executive team as well as maintaining the organization’s library of security controls. |
| Cybersecurity analyst(s) | Implements and monitors cybersecurity measures that are in line with the GRC program and business objectives. |
| Compliance analyst(s) | Monitors the organization’s compliance with all regulations and standards necessary, identifies any compliance gaps, and works to mitigate them. |
| Risk analyst(s) | Carries out the risk management program for the organization and serves as a resource for risk management across various departments, including identifying, mitigating, and monitoring risks. |
| IT security specialist(s) | Implements security controls within the IT system in coordination with the cybersecurity analyst(s). |
Explore more GRC articles
Introduction to GRC
Implementing a GRC program
Optimizing a GRC program
Governance
Risk
Compliance
Get started with GRC
Start your GRC journey with these related resources.
How Vanta combines automation & customization to supercharge your GRC program
Vanta pairs deep automation with the flexibility and customizability to meet the unique needs of larger, more complex businesses. Read more.
%20.png)
How to build an enduring security program as your company grows
Join Vanta's CISO, Jadee Hanson, and seasoned security leaders at company's big and small to discuss building and maintaining an efficient and high performing security program.
.webp)
Growing pains: How to update and automate outdated security processes
Has your business outgrown its security processes? Learn how to update them in this guide.
